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Small town in southeast Finland trials tax holiday for families of newborns

The plan means that a family with a 3,000-euro monthly income will be entitled to lump sum payment of roughly 6,600 euros representing taxes paid during the course of a year.

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Image: AOP

The little town of Sulkava in southwest Finland plans to fight the ageing of its small population by offering a new financial incentive to get residents to bring more babies into the world.

Municipal leaders of the 2,600-resident town have now decided to release the parents of newborns from paying local taxes. The tax break will be implemented in the form of a one-time annual refund of municipal taxes contributed during the year.

The plan means that a family with a 3,000-euro monthly income will be entitled to lump sum payment of roughly 6,600 euros representing taxes paid during the course of a year.

"Families will be reimbursed a year’s municipal taxes as a one-time stipend, for a child born in that year," said Sulkava coordinator Oili Tikka.

Conditions apply

The tax holiday will only be granted for the year in which a family welcomes a new baby and the reform will be applied from 2018 onwards. Apart from having a new baby, another condition for receiving the incentive is that the Sulkava must be the baby’s place of birth as well as the place of residence.

The parent or parents seeking the tax break must also list Sulkava as their place of residence in the year preceding the baby’s birth as well as on the last day of the year in which the baby is born. The child’s place of birth – and residence – must also be listed as Sulkava on the application.

Record 17 babies in 2017

The idea for the baby incentive in the form of tax relief came from a motion by The Christian Democratic Party councillor’s group, which proposed a 10,000-euro baby bonus for each child born in the town.

The proposal was further refined until the municipal council approved the tax holiday for families with newborns. Local municipal leaders believe that a vote on the proposal will be a slam dunk.

"It’s so certain, that we dared to go public with it," Tikka said.

The tiny town already pays a municipal home care allowance to families with children. However local leaders felt it was not a sufficiently attractive incentive to encourage people to boost the town’s flagging population with new births.

Last year however, Sulkava experienced a veritable baby boom as 17 new residents were added to the municipal register. On average, some 13.5 babies are born in the eastern Finland town every year.

"This year it appears that not as many babies will be born as last year," Tikka speculated.

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