Finland Times

Friday, 29 March, 2024
Home BUSINESSTax subsidy, child, healthcare allowance, edn projects to cut
Print
« Previous News
Thu, 27 Mar, 2014 12:00:52 AM
Budgetary framework and fiscal plan of govt
Price of fuel, tobacco, motor vehicles to increase
FTimes-STT Report, March 27
 
The leaders of the five components of the alliance government at a press conference after fiscal adjustment meeting. Photo – Lehtikuva.
The government has agreed on the central government’s spending limits and the government’s fiscal plan for 2015-2018 with the view to strengthen the financial foundation of the welfare society and conditions for growth to ensure that public finances are sustainable.
 
The ruling parties’ leaders finalised the fiscal adjustment plan during a two-day negotiation on Monday and Tuesday, said an official press release.
 
The intention is to decide on the General Government Fiscal Plan 2015-2018 at a government session on 3 April, 2014, after which it will be submitted to Parliament. Moreover, the Ministry of Finance's Economic Survey will be published on 3 April, 2014.
 
One of the components of the six-party alliance government, (Vasemmistoliito) Left Alliance, however, expressed its disagreement with the plan and decided to quit the government.
 
The ongoing economic crisis and successive fall of GDP in last two years prompted the authority to take austerity moves.
 
To curb central government indebtedness in a credible manner and within a realistic time frame, the Government decided in its negotiations on new measures, which will reduce central government expenditure and increase revenue by EUR 2.3 billion at 2018.
 
During its term, the Government has adopted a range of measures with immediate impact to reduce central government expenditure and increase revenue, which will have a net impact at 2017 prices of around EUR 6.6 billion.
 
On the taxation side, the adjustment measures consist mainly of increases in excise duties as well as measures increasing fairness in the taxation of earned and capital income.
 
In 2015, earned income taxation will be increased by not making adjustments for earnings level and inflation. This will increase tax revenue for around EUR 155 million.
 
Taxation of low incomes, however, will be eased by EUR 100 million by raising the basic and earned income deductions.
 
The limit of the highest income class of the progressive income tax scale will be lowered to EUR 90,000 and this will remain in effect until 2018. The measures will reduce income differences, said the government press release.
 
The changes made to capital income taxation will increase tax revenue by EUR 28 million while at the same time reduce income differences.
 
Taxation of capital income will be increased in such a way that the income limit of the higher tax rate will be lowered to EUR 30,000 and the higher rate increased to 33%.
 
Inheritance and gift taxation will be increased by raising all marginal rates in tax scales by one percentage point. In addition, the tax class of gifts and inheritances over EUR 1,000,000, which was previously prescribed as temporary, will be made permanent from 2016.
 
Prime Minister Jyrki Katainen after the meeting. Photo – Lehtikuva.
The lower and upper limits laid down for general real-estate tax and for the real-estate tax on permanent residential buildings will be raised.
 
Through its decisions, Government will steer environmental taxation and subsidies in a significantly more sustainable direction.
 
Energy taxation will be tightened by EUR 120 million by increasing the general electricity tax class I. The carbon dioxide tax on heating, power plant and working machine fuels will also be increased by EUR 90 million. The tax on transport fuels will be increased by EUR 42 million.
 
The 2015 tax increase on peat, decided earlier, will be cancelled. The decisions will improve the competitiveness of domestic forest chips. The tobacco tax will be increased by EUR 50 million.The annual motor vehicle tax on cars and vans will be increased by EUR 150 million and the higher tax will be levied from the beginning of 2016.
 
Tax subsidies will also be cut in order to increase tax revenue. Energy tax subsidies for mining activity will be abolished, and the previously tax-free liquefied petroleum gas will be made taxable.
 
The car tax reduction on taxis, excluding specially equipped taxis, and on cars imported as removal goods will be abolished.
 
In addition, fees levied by the central government will be adjusted and social and health care customer fees increased.
 
The appropriation intended to support companies' investment and development projects will be reduced by EUR 17 million. In addition, the national co-funding appropriation relating to EU Structural Fund, Cross-Border Cooperation and other Cohesion Policy programmes will be reduced by EUR 50 million.
 
National pension (KEL) and employees' pension (TyEL) index increases will be mainly 0.4% in 2015. These increases correspond to the level of the increase negotiated in the agreed labour market solution. Half of the index increase for universities and universities of applied sciences will be implemented.
 
A saving will be directed at child allowances, thereby reducing central government expenditure by EUR 110 million. In addition, discretionary government transfers allocated for improving the quality of basic education will be reduced by EUR 57 million.
 
The central government will no longer participate in the financing of projects for establishing educational institutions. The saving to central government finances will rise from around EUR 12 million in 2015 to EUR 22 million at the end of the spending limits period.
 
Provisions relating to earnings-related unemployment security will be amended, such that central government expenditure falls by EUR 50 million at 2015 prices.
 
The amendments will be prepared in cooperation with social partners with the goal of directing the saving at those receiving the highest unemployment benefits. Labour policy funding will be reduced by EUR 50 million.
 
Central government expenditure arising from the Sickness Insurance Act will be reduced by EUR 25 million. In addition, an annual initial co-payment for people 18-year-old and above will be set for drug reimbursements, which will bring additional savings in expenditure arising from the Sickness Insurance Act from 2016.
 
Transport infrastructure funding will be reduced by EUR 100 million. Grants for repairs and architectural heritage management will be reduced by EUR 15 million.
 
Central government funding will no longer be allocated to new local government water supply and environmental management projects.
 
In addition, central government wage drift will be limited to the average level of the general labour market and, as part of the Structural Policy Programme, an annual saving in appropriations corresponding to 0.5% growth in productivity will be directed at central government operating expenditure.
 
The government also decided to sell properties belonging to Senate and Metsähallitus.
 
With respect to the State Pension Fund, a legislative amendment will be prepared, on the basis of which revenue recognition from the Fund will be increased.
 
In addition, a recognition of revenue will be made from the State Guarantee Fund. The additional recognition of revenue arising from the measures compared with that outlined earlier will be around EUR 1.9 billion in 2014-2015.
 
 
« Previous News
comments powered by Disqus
More News

 
   
Copyright © 2024 All rights reserved
Developed By -