THURSDAY: Social Democrats and Left Alliance quit government talks – SDP and National Coalition Party blame each other

Disagreements on taxation prove overwhelming

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There were dramatic moments in the government talks on Wednesday evening when the Social Democratic Party and the Left Alliance decided that they could no longer take part in the discussions.
      Sources at the National Coalition Party say that the SDP and the Left Alliance walked out, while SDP leader Jutta Urpilainen says that National Coalition Party chairman Jyrki Katainen, who has been heading talks aimed at forming a six-party government, showed the two parties the door.
     
“There was not enough will to increase the progressive nature of taxation. Instead, they wanted to increase flat taxes”, Urpilainen said.
      “The taxation solution was such that fairness – that is balancing income disparities – was not implemented”, said Left Alliance chairman Paavo Arhinmäki.
      Neither he nor Katainen would comment on whether or not early elections might be coming.
     
According to Jyrki Katainen the search for a solution failed over the question of how Finland’s future is to be built so that the citizens need not fear a continued spiral of state indebtedness.
      “Achieving employment and economic growth at the same time that the public economy is stabilised – that is something that we did not agree on”, Katainen said.
     
According to Katainen, the National Coalition Party will continue negotiations with the Swedish People’s Party, the Greens, and the Christian Democrats, and will ask the Centre Party to join the talks.
      This combination would give the government a narrow Parliamentary majority – 105 of the 200 seats in the Finnish Parliament.
     
True Finns leader Timo Soini said on Wednesday that Katainen can call him “any time”.
      Centre Party chairwoman Mari Kiviniemi said that she did not yet want to comment on the party’s possible participation in a new government.
     
Green League chairwoman Anni Sinnemäki said that it is not a foregone conclusion that the Greens would stay with the government formation talks.
      The Greens will decide on Monday whether or not to participate in the negotiations that are about to begin. Several leading Green politicians were doubtful that the party’s delegate council would be in favour of joining a government with the National Coalition Party, the Centre, the Swedish People’s Party, and the Christian Democrats.
     
The main stumbling block in the negotiations was taxation.
      Before the elections the parties listed a number of threshold issues that it wanted dealt with before they would agree to join a government coalition. The National Coalition Party had only one such issue: it said that it would only join a government that would either decrease income taxes, or at the very least, keep it at its current level.
      During the difficult talks, Katainen put forward a compromise proposal for an increase in value-added tax of one percentage point, saying that his party would not retreat any further on the issue.
      The SDP and the Left Alliance did not agree to such a move. The National Coalition Party, the Greens, the Swedish People’s Party, and the Christian Democrats would have agreed to it. Arhinmäki said that the Left Alliance had proposed a “number of various taxation elements” as an alternative, but Katainen rejected them.

More on this subject:
 Government talks: National Coalition Party and Social Democrats make progress on economic policy

Previously in HS International Edition:
  Taxation proves to be thorny issue at government formation talks (26.5.2011)
  Government formation talks continue for 12th day – pressure mounts on Katainen (31.5.2011)
  Greens threatened to walk out of government talks over election reform (30.5.2011)

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