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Finnish tax revenues up 3.5% last year

More than 4 out of 10 tax revenue euros are directed towards social benefits and pension systems, followed by health care, education and general administration.

Yle verolaskuri 2018
Image: Yle
Yle News

Finland's central government took in 46.8 billion euros in tax revenue in 2017, according to figures from the state-owned number cruncher Statistics Finland. This marked a 3.5 percent gain on the previous year.

A survey carried out by the Tax Administration from August to October last year suggests that 79 percent of Finnish residents are happy to pay their taxes, a figure that has improved by 10 percentage points in the past four years. Ninety-six percent of respondents agree that collecting taxes is important because the money is used to maintain the welfare state. A full 93 percent of respondents say they pay their taxes and back taxes on time.

A graph in the Tax Administration's 2017 annual report (siirryt toiseen palveluun) shows that almost 46 percent of Finland's tax revenue results from individual income taxes, with an additional 33 percent accrued from value added taxes and excise taxes. Over nine percent of the total comes from corporate income taxes, while the remaining 11 percent or so falls into the category of other taxes.

The state receives 60 percent of the total tax pot, with municipalities receiving 34.5 percent. The rest is split between the state benefits agency, Kela (4.1 percent) and the country's Lutheran and Orthodox parishes (1.4 percent).

How the tax pie is split

When it comes to how the taxes are used, the Tax Administration reports that on average, 44 percent of tax revenue is used for social security and statutory pension payments. Both general administration (which includes interest on state debt) and health care take another 14 percent of the total.

Education accounts for 11 percent, measures promoting business (such as infrastructure investments and corporate subsidies) take nine percent, while five percent is devoted to activities under the category of order, safety and national defence. This leaves three percent under the last heading of living, recreation and culture.

Public broadcaster Yle has created a calculator in Finnish that calculates how individual tax contributions are distributed among the categories above. The calculator takes into account state, municipal and general taxes, sickness insurance daily allowances, unemployment insurance premiums, earnings-related pension insurance payments and general deductions.

The calculator assumes that the individuals in question are using their entire net income for consumption, and does not include any tax deductions. It uses 2018 data for taxation and payments and 2016 figures to calculate public expenditure.

Three regional examples

Tax percentages differ according to income levels and municipality of residence, but the overall trends listed above tend to hold true for the different regional results, as the following three examples illustrate.

32,500-euro income in Helsinki

For a person earning 2,600 euros a month in the capital, the calculator determines that close to 7,500 euros are paid in income taxes, with another 5,000 euros paid in consumption-related taxation.

In this first example, more than 6,000 euros of the almost 12,500 tax total is directed to social benefit and pension programmes, while approximately 1,500 euros each is distributed to health care, general administration and education. For Helsinki residents in this income bracket, 312 euros of their tax money is directed at defence and peacekeeping efforts, and 262 euros is used for the upkeep of law enforcement and the courts, for example.

25,000-euro income in Jyväskylä

For a person earning 2,000 euros a month in the central Finland city of Jyväskylä, the Yle calculator finds that just over 5,000 euros are paid in income tax, and close to 4,000 more is paid in consumption-related taxation on things like cars and petrol.

Of this slightly more than 9,000-euro total, 4,500 euros is directed to social security and pensions, while close to 1,000 euros is distributed to health care, education and general administration. Residents of Jyväskylä pay more of their taxes towards things like defence and law enforcement, with 453 euros going towards the former, and 380 euros towards the latter.

41,250-euro income in Rovaniemi

In Rovaniemi, the largest city in Finnish Lapland, people earning 3,300 euros per month pay 12,300 euros in income tax and another 5,700 euros in consumption-related taxes. Of this total 18,000-euro tax payment, almost 9,000 is directed toward the funding of Finland's social security and pension system, and close to 2,000 each is devoted to health care, education and general administration.

Otherwise, contributions to the other state expenditure categories are closer to those of the taxpayer in Jyväskylä than Helsinki. For example, 61 euros of the total tax payment is devoted to environmental protection and the treatment of waste.

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