Intense discussion on tax cuts during Parliamentary budget debate

Opposition disputes government claims on municipal finances

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There was intense debate in Parliament on Tuesday over when the government’s planned tax cuts should be made, and whether or not they should be implemented at all. The issues were discussed after the government presented its draft for next year’s state budget.
      The opposition National Coalition Party was especially critical of what it saw as the government’s postponement of decisions on key questions, such as taxation, transport infrastructure construction, and research and development projects, using the upcoming incomes talks as an excuse for the delay.
      Finance Minister Antti Kalliomäki (SDP) denounced such views as irresponsible. He also denied that the government was relinquishing decision-making power to labour market organisations.
      Left Alliance and Christian Democratic MPs came out against further tax cuts, calling instead for more expenditure to create jobs in the public service sector.
     
Presenting the budget to Parliament, Finance Minister Kalliomäki emphasised that the vitality of Finland’s welfare model depends on economic growth and employment. He sees a moderate incomes agreement and tax cuts linked to that agreement as the best solution for employment.
      Opposition politicians did not deny the significance of employment and growth, but there were questions on whether or not it was right for the government to first wait for the emergence of an incomes agreement before presenting its tax policy.
      "You are taking the risk that if no incomes agreement is reached in the manner that you hope it will be, this sensible line on taxation will change", said Ben Zyskowicz (Nat. Coalition).
      Kalliomäki countered that it would be irresponsible to enact large tax cuts with no knowledge of what will happen on the labour market.
      Responding to a demand by Left Alliance MP Kari Uotila to cancel planned income tax cuts, and to raise corporate taxes and the tax on alcohol to finance job creation in public services, Kalliomäki said that the Left Alliance is wandering in a canyon "where the echo is loud, but where they are the only ones shouting".
      Christian Democrat Bjarne Kallis would have wanted to send the whole proposal back to the government for reconsideration, but decided instead to call for higher taxes on alcohol and tobacco, and a 0.1% tax on transactions on the stock exchange. He said that the estimated EUR 400 million that such a tax would generate could be used to help families and pensioners, and to hire 10,000 people to work in public health care services.
     
There were also sharp divisions on municipal finances. Opposition Parliamentarians insisted that the government is giving an excessively rosy picture of the state of Finland’s municipalities.
      The Ministry of Finance says that the economic relations of local authorities and the state will benefit the local authorities financially. This was rejected by those in opposition as being based on unrealistic hopes, such as a four percent rise in tax revenues and spending.


Previously in HS International Edition:
  Where do the profits of Finnish corporations disappear to? (14.9.2004)

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