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New government likely to raise taxes, expert says

A research economist says the left-leaning parties in ongoing government formation talks are more likely to raise taxes than cut spending.

Työryhmätyökentelyä hallitusneuvotteluissa Säätytalolla.
Hallitusneuvotteluiden työryhmä “Hiilineutraali ja luonnon monimuotoisuuden turvaava Suomi”. Image: Laura Kotila / Valtioneuvoston kanslia

Over the next government term, the state will most likely manage the economy by raising taxes, Helsinki University political economist Antti Ronkainen told Yle.

“The tide has changed against austerity, just like in other parts of Europe and the United States,” says Ronkainen.

Social Democratic Party leader Antti Rinne is steering efforts to form a new cabinet with the Centre Party, the Greens, Left Alliance and the Swedish People’s Party (SPP). Ahead of last month's parliamentary elections, the SPP was the only party to indicate in Yle's election compass tool that it would rather cut spending than raise taxes to balance the budget.

Story continues after photo.

Antti Ronkainen.
Antti Ronkainen. Image: Yle

Ronkainen told Yle he wouldn’t be surprised if corporate subsidies were scaled back in the new government programme.

”I’ve heard talk of making investments into education on credit as it's seen as paying itself back,” he explained.

But Ronkainen said the toughest negotiations lie ahead next week when budgetary framework discussions begin. The big question is whether the coalition parties adopt a budget to balance finances or take on more national debt.

The Finance Ministry has meanwhile sounded the alarm that the government deficit will become unsustainable in the future if a course correction isn't made. The ministry has recommended spending cuts and tax hikes among other cost-saving measures.

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