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2019 budget plan offers carrots and sticks

The budget plan unveiled on Wednesday offers higher allowances and subsidies for some, while raising taxes on alcohol and soft drinks, for instance.

Valtion vuoden 2019 talousarvioesityksen tiedotustilaisuus.
Party chairs Sampo Terho of the Blue Reform, Juha Sipilä of the Centre and Petteri Orpo of the NCP presented their final budget on 29 August. Image: Jarno Kuusinen / AOP

The Finnish government has reached agreement on next year's budget, the last of its legislative term. The blueprint totals just over 55 billion euros with a deficit target of 1.4 billion. The cabinet promises that the overall tax burden will not rise.

The budget includes an agricultural crisis package of nearly 90 million euros. The farming sector, hard hit by drought this summer, is still a key constituency for Prime Minister Juha Sipilä's Centre Party, formerly known as the Agrarian Party.

Some 45 million euros will also be earmarked for protection of the Baltic Sea, a shallow body of water where eutrophication and toxic algae blooms have been worsened by agricultural runoff and fish farming.

The cabinet has given the green light to a new form of investment savings account proposed by Finance Minister Petteri Orpo of the conservative National Coalition Party. Set to begin in 2020, it would offer tax deferrals to those who invest as long as capital gains go into an investment savings account, with a cap of 50,000 euros.

The budget plan also calls for an extension of the so-called "Lex Lindström," a scheme championed by Labour Minister Jari Lindström of the smallest government partner, the Blue Reform party. It allows older long-term unemployed people to apply for increased benefits before receiving pensions. The original plan took effect on a one-off basis in June 2017, aimed at those over the age of 60 who have been out of work for at least five years.

Residence permits to be fast-tracked

Meanwhile some daily benefits, including sickness, parental and rehabilitation allowances, will be raised. As a result, minimum daily allowances will rise by an estimated 80 euros a month. The lowest pensions will be raised by nine euros per month.

TE employment offices will get more than 10 million euros to help jobseekers find work.

Residence permits for employees and entrepreneurs will be fast-tracked. The government promises a maximum processing time of four months by the end of this year and a target of two months next year.

Car taxes will be reduced by 50 million euros in 2020, and will also be more closely pegged to emissions. Taxes on alcohol will be hiked by 30 million euros and on soft drinks by 25 million euros.

The cabinet is to formally approve the budget by mid-September and send it to Parliament for approval. MPs typically ratify it with minor changes in December.

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