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Top 11% of earners contribute almost half of direct tax revenue

High income earners pay the lion’s share of Finnish taxes. Recent figures from the state information service Statistics Finland show that the top 11 percent tier of Finnish earners paid 45 percent of the total revenue from direct taxes in 2013, while the bottom 44 percent of earners contributed just eight percent collectively to state coffers.

Half a million Finns earned over 50,000 euros in annual gross revenue in 2013, accounting for just over ten percent of the population. This high income group's tax contribution accounted for 45 percent of revenue from direct taxes in 2013, according to figures from Statistics Finland. Total revenue from direct taxation in 2013 was 29 billion euros, while the total tax revenue received by the state, including sales taxes, taxes on services and property taxes, was 88 billion euros.

Income earners received wages totalling 128 billion euros in Finland in 2013, and 29 billion euros of that was paid as direct taxes in the form of income tax, capital gains tax, municipal taxes and sickness insurance contributions. This number does not include pension contributions.

Low income earners chip in 2 billion

On the other extreme are the two million Finns who earn a gross annual income of less than 20,000 euros, a low income for statistical purposes. In 2013, they accounted for 44 percent of all income earners in Finland, and they paid 7.5 percent of the direct tax pot, or slightly more than two billion.

Middle income earners with an annual gross income between 20,000 and 50,000 euros, paid 48 percent of the overall share, or 14 billion euros. 45 percent of all earners in Finland fall into this category.

Municipal taxes up over 70 percent, state taxes down six

According to Statistics Finland, taxable income grew by 3.2 percent from 2012 to 2013. Capital income grew by nearly 18 percent, while earned income grew only by a good two per cent. There were 4.6 million income earners, of whom 4.5 million received earned income and 1.2 million reported capital income.

The proportion of taxes and payments in taxable income was 22.4 percent in 2013. In the previous year, this share was 21.5 percent.

Taxes and payments increased by 38 percent in real terms in the decade from 1993 to 2013. During the same period, municipal taxes grew by 71 percent, with its share of direct taxes growing from 50 to 62 percent. At the same time, the share of state taxes went down from 33 to 27 percent. The share of taxes on earned income fell from 31 to 20 percent, the organisation reports.

Statistics Finland released the data for the 2013 year in December 2014. Information from the year 2014 won’t be available until December 2015.

This story was edited on 8 July to clarify that the tax revenues referred to are direct income taxes, which form less than half of all taxes collected by the state.