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Higher sin taxes, more education spending in new govt agenda

Yle expects that the new government programme will be released early on Monday as local media have already leaked many of the details.

Antti Rinne saapumassa hallitusneuvotteluihin Säätytalolle Helsingissä.
The SDP's Antti Rinne arrives at the House of Estates for coalition talks on Wednesday 29 May. Image: Antti Aimo-Koivisto / Lehtikuva

Five party leaders gathered at the House of Estates on Sunday expressed a desire to go public with the broad strokes of its agenda for the next five years, since some aspects of the programme had already been leaked to the media, according to information obtained by Yle.

Social Democratic Party chair Antti Rinne, who is leading the five-party negotiations, is aiming for balanced public finances by 2023, in spite of increasing government spending to the tune of at least one billion euros. He has also set an ambitious goal of 75 percent employment by the same year.

Additionally, media pundits expect that some extensive reforms would be placed on the back burner. For example, the social and health care overhaul that brought down the outgoing administration will be handed over to Parliament for further work.

The five parties involved in the talks include Rinne’s SDP, as well as Juha Sipilä’s Centre Party, which suffered heavy losses in recent parliamentary and Europarliament elections, the Greens, which made great strides in both polls, the Left Alliance and the Swedish People’s Party.

In practice, the incoming government will put an end to eight years of austerity, adding 1.2 billion euros to government’s spending bill.

Also on Sunday, the five-party group was expected to sit down to discuss ministerial portfolios. Yle understands that of a total of 18 ministries, the SDP would hold seven, while the Centre would occupy five. The Greens, Left Alliance and SPP would be responsible for three, two and one respectively.

50-euro boost for small pensions and activation model recall

The government programme proposes a 50-euro increase for persons with the smallest pension incomes over a period of four years, half of the sum that had previously been bandied about.

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eläkeläisen kädet laskevat euroja
The 50-euro boost will apply to persons earning small pensions. Image: AOP

It has also been agreed that the contentious activation model introduced last year would be terminated. The scheme effectively cut unemployed jobseekers’ unemployment benefits if they did not meet certain criteria in a three-month evaluation period.

Longer compulsory education and Swedish back as a compulsory subject

The new administration wants to extend compulsory education to include upper secondary and vocational schooling. It also plans to restore a Swedish-language test as a compulsory part of upper secondary school matriculation exams, a practice that ended in 2005.

The Rinne programme would also roll back deep cuts to spending on universities and other tertiary education institutions implemented by previous administrations.

According to daily Helsingin Sanomat, funding for universities will increase by 40 million euros annually, while colleges of applied sciences will receive 20 million euros a year. At the same time, appropriations for higher education institutions will once more be subject to index increases, meaning that they will reflect annual changes in the cost of living.

Additionally municipalities will receive a total of 235 million euros over five years to hire more teachers for vocational education.

Household expenses tax credit to fall, paternity leave to rise

This year the maximum deductible amount for household expenses is 2,400 euros with 50 percent of the total applicable to labour costs. The new administration plans to reduce the maximum tax credit to 2,250 euros, with labour at a maximum 40 percent of the total. The measure is expected to put an estimated 95 million euros annually into state coffers.

Parental leave reform was a subject that rose to the surface during parliamentary election campaigning. The new government has now decided to extend paternal leave quotas. The measure will not affect maternal leave entitlements. It will also continue to support caring for children at home and will introduce a modest increase in child allowances.

Change to definition of rape offences

The definition of rape in the criminal code has also come under scrutiny, according to Helsingin Sanomat. According to information obtained by the paper, new laws will ensure that sex without consent is always defined as a criminal offence. Last year a citizens’ initiative pushing for amendments to the law gathered more than 50,000 signatures.

HS also reported that contraception would become free for everyone under the age of 25 and that guaranteed access to a doctor would be amended to ensure access to care in seven days, in non-critical cases. The minimum nursing quota in institutions would be set at 0.7 per patient.

Higher tobacco, alcohol and fuel taxes

The government programme also takes aim at curbing the consumption of harmful substances by hiking taxes on them. This means a five-cent increase on the litre price of petrol and diesel. The administration has estimated that higher taxes on fossil fuels will net the state an additional 250 million euros in tax income.

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A glass of beer on a bar.
Tax hikes on alcohol will be more moderate than on tobacco products. Image: Jyrki Lyytikkä / Yle

Meanwhile taxes on tobacco products will be significantly higher. A packet of cigarettes that now costs eight euros will in future cost 9.80 euros after the tax measure is implemented. However tax increases on alcohol will be more moderate, to the tune of about 50 million euros annually.

Altogether the schedule of tax hikes will net government 700 million euros annually.

Lower taxes on income, jury still out on capital gains tax

The five-party group has agreed to ease up on taxes on earned income to the tune of 200 million euros annually. The tax relief will mostly benefit lower-income groups as a means of offsetting the pain of the increase in sin taxes.

The fledgling coalition has not yet reached a decision on capital gains and withholding taxes and the jury is still out on the possible sale of state assets to patch the 1.2-billion-euro hole caused by proposed additional spending.

Hornets to be replaced, police ranks to be beefed up

According to tabloid paper Iltalehti, the government programme includes an aspiration to fully replace Finland’s ageing fleet of 64 Hornet jets. Officials have been evaluating offers from different suppliers and are due to decide on a purchase in 2021.

In terms of internal security the administration aims to fund the recruitment of additional 300 officers, while it will also boost resources in prosecutors’ offices, HS reported recently.

Shift in Nato policy

Iltalehti also cited plans to modify Finland’s stance on Nato, with the new government’s position written thus, “The foundation of Finland’s security and defence policy includes maintaining its national room to manoeuvre and options. This includes the possibility of applying for Nato membership.”

Membership in the military alliance has been hotly-debated in Finland for decades and although support for membership has risen in recent years, a majority still oppose joining the US-led alliance.

Increased refugee quota, one-month target for processing asylum applications

According to HS, the government programme calls for an increase in Finland’s complement of quota refugees to 850 in 2020, from the current 750. Thereafter the number will be reviewed depending on the number of applicants, within the range of 850 to 1,050. The incoming administration also set a one-month target for processing asylum applications.

The use of ankle monitors will be considered in cases where asylum applications are rejected. The new government also aims to look into reported problems relating to family reunification cases, ensuring children’s best interests and income requirements set for family members seeking re unification under international protection.

Major infra projects on the drawing board

Starting in 2020, the new government plans to bankroll basic road maintenance to the tune of an additional 300 million euros annually, HS said, citing drafts it obtained of the new government agenda.

The administration is also keen on advancing major rail projects, including the main line and planned extensions as well as the possible design of an eastern line. It also plans to get a one-hour rail connection rolling between Helsinki and Turku.

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