Finance Ministry begins budget discussions on Monday
Budget talks for entire government begin in late August
Minister of Finance Jutta Urpilainen (SDP) says that major changes are not possible in plans for next year’s state budget. She points out that the upcoming budget talks are taking place in the shadow of a European recession.
The Ministry of Finance begins its internal budget talks on Monday. The budget negotiations for the whole government are scheduled for the end of the month.
Prime Minister Jyrki Katainen (Nat. Coalition Party) reiterated in an interview with the Finnish Broadcasting Company (YLE) last week that Finland has no need for tax increases or cuts, in spite of the difficult situation in Europe.
Urpilainen agrees with Katainen. She says that it is not certain if Finland is experiencing a period of lengthy slow growth, or if a worse decline - possibly a recession similar to that of 2008 - might be on the way. That is why the budget talks are unlikely to yield new tax breaks or significant increases in spending in any direction.
“We need to prepare for difficult times. If the economic situation deteriorates we must have additional measures available in order to be able to support employment and economic growth”, Urpilainen says.
“Fluctuations in the world economy are felt quickly here.”
The upcoming budget is expected to include approximately an equal amount of spending cuts and tax increases. No ministry will be spared the cuts.
The key tax increases involve value-added tax, income tax, and the taxation of large pensions and inheritances. In addition, those earning more than EUR 100,000 a year will be subject to a so-called solidarity tax.
Although economic growth is decreasing, the Minister of Finance feels that Finland’s economic situation remains quite stable compared with that in many other parts of Europe.
“We can be satisfied that the measures that we have taken on behalf of our own economy have been the right ones”, Urpilainen says, basing her views on the assessment by credit risk evaluator Moody’s, according to which Finland’s economic prospects remain stable, and the country still enjoys rare triple-A credit rating status.
Previously in HS International Edition:
Finance Ministry forecasts slow economic growth (20.6.2012)
Need for spending cuts and tax hikes lower than expected (16.3.2012)