Finance Minister criticises ardent defenders of domestic corporate ownership

Taxation of dividends discussed at Chamber of Commerce tax seminar

Antti Kalliomäki

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Minister of Finance Antti Kalliomäki (SDP) says that the reform in corporate taxation that was implemented this year has turned "the whole world-view" of many influential people in the Finnish economy upside-down.
      "People who previously spoke in favour of greater internationalism and global capitalism have turned to speaking for domestic ownership as a key factor in Finland’s success", Kalliomäki said at a taxation seminar arranged by the Central Chamber of Commerce on Thursday.
     
In his speech the Minister of Finance said that he hoped that the critics of the taxation system would remember to consider the total overall change in taxation when they complain about the taxing of corporate profits. He said that now most of the grumbling focuses on details.
      This year and last year the taxation of income has decreased by a total of EUR 1.1 billion. The taxation of dividends of shares owned by households has been the focus of a good deal of controversy. The tax is expected to bring in about EUR 80 million.
      "The sum is not small as such, but in the distribution of profits of Finnish limited companies, it does not represent an overwhelmingly large proportion", Kalliomäki said diplomatically.
      Kalliomäki also feels that it is strange that the new corporate tax system is suddenly being blamed for the relatively low share price of Finnish medium-sized quoted companies.
     
The government’s taxation policy, aimed at stimulating growth, has been based on an estimate of weak international economic development, and its impact on Finland.
      According to Kalliomäki, tax cuts were needed because consumption by households was seen to be the best way to maintain overall demand.
      Now that growth estimates are increasing, industrial output is recovering, and growth in the technology sector is speeding up, Kalliomäki feels that strong stimulation measures are not necessary.
     
Another expert, Kari S. Tikka, a professor of tax law, also lashed out at calls for favouring domestic ownership of shares.
      Tikka noted that favouring Finnish ownership by Finns violates EU legislation. He agreed with Kalliomäki that the present exceptionally low taxation of dividends has not led to an increase in the perceived value of Finnish shares.
      He urged Finns to diversify their investment portfolio on a global level. "If things go badly in Finland, it is good for dividends to come in from abroad", Professor Tikka said.


Links:
  Central Chamber of Commerce

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