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Yle sources: Finland preparing support package to offset inflation, energy price rises

The measures under consideration include an additional child benefit payment, a reduction in daycare fees, a cut in VAT and subsidies to help pay energy bills.

Katosta roikkuva valaisin.
The recent rise in energy prices has led to calls for government action. Image: Henrietta Hassinen / Yle
Yle News

Finland's government is preparing a package of support measures aimed at easing the effects of the rising rate of inflation and especially the increase in energy prices.

Some of the options on the table include an extra child benefit payment, a reduction in daycare fees and subsidies to help pay energy bills.

According to Yle sources, the proposal to make an additional per child welfare payment of 100 euros in December was put forward by the Centre Party, and would be implemented in such a way that it would not affect income support.

Prime Minister Sanna Marin's Social Democratic Party (SDP) meanwhile proposed a reduction in early childhood education fees, which Yle has learned has been given the green light by the other coalition parties and will come into effect next year.

The deduction would be income-linked and therefore also seen as a means of boosting employment.

In addition, households affected by the rise in electricity prices may be eligible for a separate discretionary allowance paid through Finland's benefits agency Kela. The government parties have however not yet agreed on who would be eligible for this benefit or how much might be paid out.

Another option under discussion would see subsidies paid directly to energy companies based on the amount of energy each customer consumes. A similar system was used in Norway last winter and Norwegian authorities are planning to use it again this winter. In some cases, up to 80 percent of a customer's electricity bill was reimbursed by the state under the scheme.

Helsingin Sanomat reported on Tuesday that the measures may include a 10 percentage point cut in value added tax (VAT) on energy bills, although Yle sources understand this may be as high as 14 percentage points.

However, there is as yet no consensus between the parties on this proposal, with the Left Alliance and the SDP pushing for the initiative while the Finance Ministry — with Centre Party chair Annika Saarikko as Finance Minister — arguing that there is not enough time to roll out the tax break before winter.

According to Yle sources, government parties have been looking for measures that would be quick and easy to put into place, targeted at those most in need, limited in time and not a huge burden on public finances.

The final decisions are expected to be taken at the government's budget negotiation meetings scheduled for Wednesday and Thursday.

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