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Academic cautions against lavish spending as millions await tax refunds

On Tuesday, the Finnish Tax Administration Vero will pay out billions in refunds to diligent taxpayers who’ve dutifully handed over more than their fair share of income tax in 2016.

Ihmisiä kauppakeskuksessa.
Image: Henrietta Hassinen / Yle

Finland’s tax authority Vero will pay out billions in tax refunds to millions of conscientious taxpayers who have paid too much income tax. One researcher said that this kind of Christmas windfall can tempt many into unnecessary spending.

The almost-magical appearance of tax refunds in the bank accounts of millions of lucky folk signals the final lap toward Christmas in Finland. Merchants are expecting to break seasonal sales records as many consumers find themselves flush with cash.

A recent Nordea survey about Christmas spending plans found that one fifth of roughly 1,000 respondents planned to bankroll seasonal expenses with savings or with their tax refunds. Just one in ten said they would turn to debt for the season.

Consumption researcher Henna Syrjälä of Vaasa University has looked into the spending habits of the disadvantaged and how they overcome daily financial hurdles. For them, the reality of Christmas is completely different, as budgets are denominated in tens rather than hundreds of euros.

When cash is tight

Syrjälä said that people who can afford to put on a lavish spread for Christmas but want to cut back can borrow from the playbook of their less solvent peers.

"You can focus only on the essentials and think about what is enough. Be content with what you have," she advised, adding that it’s possible to stretch budgets by doing more at home, such as crafting greeting cards and baking gifts.

Although low-income households have their survival mechanisms, the many seasonal charity drives indicate that being poor at Christmastime is a struggle, Syrjälä noted.

"Especially when it comes to children, the aim at Christmas is to show that things are not very different from in other homes – and that is difficult," she remarked.

Temptation to splurge on gifts

According to consumption researcher Syrjälä, it is likely that at the other end of the scale, some tax refund recipients will be tempted to use some of that windfall for Christmas spending.

"For example giving gifts may feel like an unavoidable expense and after all it has become a social norm – gift giving is part of Christmas," she noted.

Syrjälä said that while Christmas is a time that is filled with traditions such as Santa Claus, spending quality time with loved ones and good food and drink, it is also constantly changing and evolving.

She pointed to the emergence of vegan Christmas meals, Christmases spent alone, and the rise of events specially designed for people living on the breadline.

Syrjälä said that a new trend has seen Christmas spending moving in a more sustainable direction.

"Sustainable spending is a trend that is steadily getting stronger," she added.

Tip: Use old newsprint as wrapping paper

According to the researcher, sustainable spending at Christmas may take the shape of recycling gifts or even wrapping presents in old newsprint. She encouraged families to give such ideas a try.

"It’s possible to come up with beautiful things."

She said that the increasing popularity of intangible gifts shows that sustainable spending has also gained a foothold in Finnish Christmas.

She pointed out that purchasing used items as gifts is no longer seen as untenable. A recent survey by the Finnish online second-hand marketplace Tori.fi showed that more than 1,300 consumers said they had no problem with receiving a recycled item as a gift. More than half said that they would be thinking from an environmental perspective in their Christmas preparations.

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