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Finance minister hints government may cut income tax

The minister's comments come after the Central Chamber of Commerce proposed a two percentage point cut to the income tax rate.

Valtiovarainministeri Anni Saarikko vieraili Kajaanissa maanantaina.
Minister of Finance and leader of the Centre Party Annika Saarikko. Image: Jarmo Nuotio / Yle

Minister of Finance Annika Saarikko (Cen) has suggested that the incumbent coalition government could agree on a reduction in Finland's rate of income tax.

The minister's comments followed an event organised by Finland's Central Chamber of Commerce on Wednesday morning, where a proposal was put forward that income tax should be reduced by two percentage points across the board during the term of the next government.

However, Saarikko responded that implementing such a reduction would not necessarily mean waiting for a change of government.

"Personally, I think that this government still has a window of opportunity to make a decision," she told Yle. "I think that even during this government's term, tax cuts on waged income could be agreed."

2022 budget already agreed

Saarikko's made her comments a couple of weeks after the governing parties already reached an agreement on next year's budget.

"Traditionally, tax decisions have always been made during the autumn budget debate. One would have to carefully assess how it [a decision] would affect other matters," she said, adding that the issue would have to be considered in the wider context of how the Finnish economy will recover from the Covid crisis.

"It is even more important to look at the broader issue of how economic growth will become sustainable. Taxation is one way of doing this, to strengthen growth and employment," the minister said.

Any decisions on income tax cuts made in next year's budget negotiations would only come into force in 2023, at the earliest.

Education Minister shoots down suggestion

Minister of Education and leader of a Centre Party coalition partner the Left Alliance, Li Andersson, seemed to shoot down the suggestion of a tax cut within this current government's term of office via a series of tweets shortly after Yle reported Saarikko's comments.

"Working life is suffering from a severe shortage of experts," Andersson wrote. "With regard to science funding, the cuts of 2023 are still unresolved and vocational education will need permanent additional investment. Instead, the finance minister wants to prioritise tax cuts in a recovery."

"She [Saarikko] correctly anticipates that there will be no consensus within the government," Andersson added.

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