Government negotiators agree on allocation of portfolios; administration to stress energy and entrepreneurship

Reductions in income tax and VAT on food; alcohol and tobacco taxes to go up

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The four parties designated to be in Finland’s next coalition government agreed on the allocation of the ministerial portfolios in discussions that continued into Sunday evening.
      The largest party in Parliament, the Centre Party, will take on the posts of Prime Minister, Minister of Foreign Trade, Minister of Municipal Affairs, Minister of Agriculture and Forestry, Minister of Transport, Minister of Trade and Industry, Minister of Social Affairs and Health, and Minister of the Environment.
      The conservative National Coalition Party will get the positions of Minister for Foreign Affairs, Minister of Finance, Minister of the Interior, Minister of Education, Minister of Communications, Minister of Defence, Minister of Social Services, and Minister of Housing. The post of Speaker of Parliament is also slated for the National Coalition Party.
      The portfolios of the Minister of Labour and the Minister of Justice will go to the Greens, and the Minister of Culture (& Sport) will be from the Swedish People’s Party, which will also get the portfolio of a new ministry responsible for issues related to the European Union and immigration matters.
     
The National Coalition Party and the Centre will thus get eight ministerial portfolios each, while the Greens and the Swedish People’s Party will each take two. The number of ministers is set to increase from 18 in the outgoing government to 20.
     
One marked change of direction from the previous coalition is the way in which the Social Democratic hold on the conduct of foreign affairs has passed to the conservatives of the National Coalition. It is not merely that the portfolio held since 2000 by Erkki Tuomioja - and before him by President Tarja Halonen from 1995-2000 - will be taken up by an NCP member, but also the chairmanship of the influential Parliamentary Foreign Affairs Committee has changed hands.
      Given that Defence is also slated for the National Coalition, which has advocated NATO membership for Finland, and given that foreign affairs are conducted according to the Constitution by the President and the government in tandem, this shift in political balance may have some ramifications (see also other article on Presidential powers). The last time a representative of the National Coalition Party carried the Foreign Affairs portfolio was in the 1930s.
     
A completely new ministry will also be established from early next year. The new Ministry of Labour and Commerce will be formed out of elements of the present Ministry of Trade and Industry and the Ministry of Labour, and will in effect rather downgrade the significance of the latter ministry. It is believed the new "superministry" job will go to the Centre Party, although it is likely there will in fact be two ministers on the roster. The moves to dismantle the Labour Ministry have already brought a rebuke from SAK, the Central Organisation of Finnish Trade Unions.
      In other related shuffles and modifications, the Ministry of Finance will be dealing with issues of municipal affairs and administration. Immigration and integration matters will henceforth be dealt with by the Ministry of the Interior.
     
During the upcoming electoral term, the government plans to raise taxes on alcoholic beverages and tobacco products by EUR 30 million, while an increase of EUR 300 million can be expected in energy and environmental taxes.
      The government, which has declared aims of improving employment, the conditions for entrepreneurship, and climate & energy policy, is setting as its goal the creation of between 80,000 and 100,000 new jobs.
      Value added tax on food is to be cut from the present 17 per cent to 12 per cent, and there will be reductions in income tax at all income levels.
      Taxation of pensioners is to be reduced so that the highest pension taxes will not go above that of a wage earner.
      Inheritance tax and gift taxes will be lowered, and removed entirely in cases in which businesses, farms, or forest land is handed down from one generation to another.
     
The government negotiators reached agreement on Saturday on spending and taxation for the coming years.
      Tax cuts will amount to nearly EUR 2.2 billion, with reductions in income tax accounting for around half of this figure. With around 390 million euros to be clawed back in other increases, the net impact will be a fall of around EUR 1.8 billion over the next four years.
      Spending is to increase by EUR 1.3 billion over the period to 2011.
      National Pensions will be raised by EUR 20 a month from next January. The minimum levels of maternity, paternity, and parental leave payments as well as sick leave will be raised in 2009.
      Development aid is to increase by some 375 million euros over the electoral term, but there is no mention in the programme of when development funding should match the 0.7% of GDP set by the United Nations.
     
The names to be fitted to the various portfolios will become clear in due course; the Greens, the National Coalition, and the Swedish People's Party are to announce the names of their designated ministers today, Monday. The Centre Party's full list of ministers is expected on Tuesday.
      At present, with the sole exception of the Prime Minister's job, where Matti Vanhanen will continue in office, the identities are known only to party leaders. Nevertheless, speculation is rife: one theory is that the job of Speaker of Parliament may go to Sauli Niinistö, who almost single-handedly won the election for his party. Niinistö, a former NCP party leader, Finance Minister, and the 2006 Presidential Election runner-up, could alternatively be given the Foreign Affairs portfolio.
      NCP Chairman Jyrki Katainen could follow recent tradition and take Finance (as did the SDP's Eero Heinäluoma in the outgoing government, and as did Sauli Niinistö in the two Paavo Lipponen administrations from 1996-2003), or alternatively he may wish to occupy the Foreign Affairs desk if Niinistö elects to take the Speaker's job. In any event, he will become Deputy Prime Minister.
      The Centre Party's Mauri Pekkarinen is thought likely to remain at the Ministry of Trade and Industry, particularly as this desk is slated to increase greatly in significance as the electoral term proceeds, and the name of Paula Lehtomäki has been suggested for Environment. She was Minister of Foreign Trade in the outgoing coalition. The Green ministers are likely to be party chair Tarja Cronberg (Labour) and Tuija Brax (Justice). Swedish People's Party Chairman Stefan Wallin could take Culture & Sport, and the new EU Affairs/Immigration desk might go to Astrid Thors, who was a MEP for eight years from 1996-2004.

More on this subject:
 UPDATE: Katainen to be new Finance Minister, Kanerva to hold Foreign Affairs post

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