Parliamentary opposition criticises government stimulus measures

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What should the government of Prime Minister Matti Vanhanen (Centre) be doing now that banks are falling, stock markets crashing and economic growth dwindling?
     No agreement was reached on that matter on Tuesday, when Parliament began debate on the government’s proposal for next year’s national budget.
     Parties in the government front felt that the government is enacting the best possible economic policy at the best possible time. However, this has failed to impress the opposition.
     
Unpleasant numbers will be seen in Finland as well, warned Minister of Finance Jyrki Katainen (Nat. Coalition Party) . However, he added that ordinary citizens need not be too worried, unless they have significant economic risks in their lives. He also insisted that there is no prospect of a repeat of the severe recession of the 1990s.
     According to Katainen, Finland could face serious blows resulting from both problems in the United States, as well as a possible slowdown in the Russian economy. He also sees economic risks stemming from the war between Russia and Georgia.
     However, the government predicts that inflation will slow down next year, and buying power will grow. Many opposition representatives cast doubt on the predictions.
     From the opposition benches, former Minister of Finance Antti Kalliomäki (SDP) said that he does not understand Katainen’s optimism. “The people’s confidence in the economy is at rock-bottom.”
     
Katainen praised the government proposal for tax cuts worth EUR 870 million.
     “Next year is exactly the right time to implement most of the income tax cuts decided upon in the government programme.”
     The opposition did not join in the praise. The main thrust of the counterarguments were that cuts in income taxes are excessive, and that they are unfairly distributed. Instead of cutting taxes, state funds should have been used for stimulus measures, including public construction and social benefits.
     “All of the eggs are now in the same basket”, said Jutta Urpilainen (SDP).
     
The government believes that it is making an improvement of historic dimensions in social benefits, by raising the smallest social welfare and health payments to the level of labour market support - a benefit designed to help the unemployed get work.
      There was some praise for this from the opposition, but others were more critical. Esko-Juhani Tennilä (Left) said that the labour market support is insufficient, and fellow Left Alliance MP Martti Korhonen summed up his views on the government’s taxation and social benefit proposals: “The foundation of values for the government parties is as cold as dry ice!”


Previously in HS International Edition:
  Government on budget: even income tax cuts, slight rise in tobacco tax, alcohol tax unchanged for now (28.8.2008)
  NEWS ANALYSIS: Stopping growth in tax progression would be something new (22.8.2008)
  Budget: Finance Minister Katainen proposes EUR 800 million in tax cuts (1.8.2008)

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