Mayor Pajunen: Helsinki must raise municipal tax
Jussi Pajunen
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Helsinki Mayor Jussi Pajunen (Nat. Coalition Party) says that the Finnish capital cannot take on more debt, and that now it has to tighten its belt and increase the municipal tax.
“All indicators suggest that the present level of taxation is insufficient for the city’s revenues.”
Finland’s municipal income tax is currently at 17.5 per cent.
A one-point rise would increase expenses of a middle-income Helsinki resident earning about EUR 30,000 a year by a few hundred euros a year. It would increase the city’s revenue by EUR 110 million.
Pajunen will not say if a tax hike will be needed already next year. He says that the decision is up to politicians, who will decide the basic guidelines of the 2011 budget later this spring, and finalise it in the autumn.
“If there is to be a decision on tax hikes, it will be a decision of the City Council in November”, Pajunen says.
For a mayor affiliated with the National Coalition Party to come out in favour of a tax increase is noteworthy, as the party has traditionally been opposed to raising taxes.
The Social Democrats, who had called for a tax increase, were not included in the budget agreement of the large parties in the city. Of the other large Helsinki parties, the Greens and the Left Alliance have said previously that the tax hike will probably have to be implemented in the coming years.
A decline in tax revenue has hurt Helsinki’s economic outlook.
According to initial calculations, the city stands to fall short of earlier predictions of tax revenue by more than EUR 100 million than initially expected. An equivalent amount of money failed to materialise, as properties and buildings that the city tried to sell, but could not find a buyer.
At the same time, city expenses last year grew by another 7.4 per cent.
“No additional cuts were made last year. When the foundation of the economy was shaky, we wanted to keep the wheels of the city turning with our own action, and stimulate”, Pajunen explains.
Helsinki will borrow EUR 1.3 billion by 2012 for the construction of new residential areas.
Pajunen insists that living on debt cannot continue. Next year, Helsinki will spend the equivalent of one percentile of the municipal tax rate on loan servicing costs.
Cost cutting measures are familiar. Retiring employees are not being replaced by new ones as eagerly as before.
“Most of Helsinki’s costs are personnel costs. The key method is to take advantage of people retiring.
Helsingin Sanomat
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| 29.1.2010 - TODAY |
 Mayor Pajunen: Helsinki must raise municipal tax |
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