Finland’s three-party centre-right government will resume budget discussions on August 8 about whether to cut housing benefits and lower the low and middle-income family daycare fees. The budget talks are expected to result in proposals to change Finland’s tax rates.
As reported by YLE Finland, the country’s unions demanded tax relief for earnings-related income after the austerity-minded government’s hard-won “competitiveness pact” to reduce unit labour costs became a reality, imposing a wage freeze, 24 hours of more work annually and reduced salaries for public sector employees.
Finland’s labour organisations argue that the pact has also resulted in higher pension and social insurance contributions for employees, and therefore the loss to their purchasing power should be compensated for with lower income tax rates.
Erkki Virtanen, former head of the employment and economy ministry, has warned serious structural cuts are necessary for Finland to straighten its finances.