Finland’s new government plans spending spree, Iltalehti reports

Bloomberg News | June 2, 2019 | 12:07 pm Base Metals Precious Metals Europe Copper Diamond Gold Iron Ore Nickel Zinc 
The Hautalampi cobalt-nickel-copper project in Finland. Photo by Hautalampi.

Finland’s next government, encompassing five parties from the left and center of the political spectrum, will increase spending by about 4 billion euros ($4.5 billion), Iltalehti reported, citing a draft of the government program agreed on Friday.

The incoming cabinet, led by Prime Minister-designate Antti Rinne of the Social Democrats, is due to unveil its program and composition, including ministerial portfolios, on Monday. Here are some highlights of the planned measures.

Spending increases:

Permanent spending will rise by 1.23 billion euros by 2023 compared with the plan announced in spring. It will boost spending on areas including education, improving income equality, and combating climate change. The government plans to spend as much as 3 billion euros on one-off measures and socially relevant experiments. Measures include rail and road infrastructure works. One-time measures will be funded by selling state-owned assets to ensure government debt won’t grow.

Tax increases:

Planned tax revenue increase amounts to 730 million euros.

  • Dividends: The government plans to study whether a 5% tax can be levied on dividends paid to foreign funds and other tax-exempt entities.
  • Real Estate: The government plans to investigate by 2022 the possibility of levying a “reasonable” tax on capital gains accrued to foreign funds and other tax-exempt entities from real-estate investments.
  • Fossil Fuels: 250 million euros to be raised from higher taxes on fossil fuels.
  • Mining: Government intends to look into establishing a mining tax and analyzing the possibility of taxing capital gains from the sale of mining rights, including those held by foreign companies. 30 million euros to be raised from higher taxes on mines’ electricity consumption.
  • Tobacco and Alcohol: Gradual tax increases of about 200 million euros on tobacco and nicotine products. Alcohol taxes to rise by 50 million euros.

(By Kati Pohjanpalo)

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