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Ins and outs of the 2018 budget proposal: Yle lists the most significant changes charted

Smokers will lose out and families with small children will win, if the Ministry of Finance's budget proposal for 2018 becomes a reality. The Finnish Broadcasting Company Yle takes a look at some of the changes proposed to state funding.

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Image: Stina Tuominen / Yle

The 2018 budget proposed by the Finance Ministry under the country's centre-right leadership includes decisions that will affect the unemployed, pensioners and wage earners for better and worse.

Despite postponing decisions on taxation until the end of August, the proposal already contains several changes that will have a lasting effect – if they are approved by the government and Parliament in the autumn. Yle compiled a list of the proposed changes that would have the most impact.

Day care fees would fall

Many low- and middle-income families would benefit if the government makes good on its promise to lower income levels determining day care fees. Well-off families would also benefit from a larger sibling discount in the cards. Fees for each additional child in day care would drop by 50 percent. The Taxpayers Association of Finland has calculated that a family of four earning 3,200 euros a month would stand to win 170 euros monthly.

Tax break for kids would be eliminated

A short-lived tax break for every child in families under a certain income level, introduced in 2015, would be eliminated if the budget proposal is accepted. The break awarded 50 euros per child to one parent in two-parent families and 100 euros per child to single-parent families, for a maximum tax write-off of 400 euros.

Study aid for parents would rise

Parents that are studying would receive 75 euros more in study aid per month in the 2018 budget proposal. The amount of children the parent has would not affect this.

Cuts to most social benefits on the horizon

Index increases on benefits paid out by the state administrator Kela – including such things as basic pensions and sickness compensation – would be frozen, effectively cutting many monthly payments. Labour market subsidies for the unemployed will, for example, stay at current levels. Finland's last-resort form of aid, known as basic assistance, will however go up slightly.

Cuts to unemployment benefits

People without work might lose one day of benefits per month in 2018, if they can't meet stricter requirements imposed by the state that show they have been looking for work industriously. This could cut the benefit by more than 32 euros monthly. For the more recently jobless still receiving the earnings-related daily allowance, the penalty could eliminate 66 euros monthly.

Housing benefit would be cut

Finland's housing benefit would see a return to ceilings determined by square footage and benefits tied to cost-of-living indexes and not rental price indexes. Both changes would cut housing benefit levels, especially in the capital city region where housing is most expensive. Hikes to taxes on real estate are also proposed, as well as a cut to tax deductions on housing loan interest.

Higher solidarity tax income levels would be restored

Finland lowered the income threshold for the so-called solidarity tax in 2015, requiring people earning more than 72,300 euros a year to pay an extra tax to help meet the costs of the ten-fold increase in migrants arriving in the country. The 2018 budget proposal would return this annual income threshold to the original 90,000 euros, in effect providing a tax break to some high-income earners.

Lighter tax on cars

Notoriously high taxes on cars in Finland would fall again, if the ministry's plans go through. The amount of benefit this change would bring is dependent on the emissions a car produces. The Taxpayers Association of Finland calculates that car owners would stand to save 210 euros on a car that costs 32,000 euros with emissions levels of 124 g/km, for example.

Low-income residents exempt from Yle tax

Low-income earners would no longer have to pay the obligatory 95-euro annual Yle tax introduced years ago to replace TV license fees in Finland. Middle-income earners would in turn see the tax go up by around 20 euros annually.

Tobacco products more expensive

The 2018 budget proposal would also raise the tobacco tax. A pack of cigarettes would cost 6.60 euros next year if the proposal becomes a reality, up from 6 euros a pack this year.

The government will meet to consider the budget proposal at the end of August, and a final version is projected to be published on September 19.

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