2. What is welfare for Finns?
● People work to pay taxes to the municipalities and
the government, who with those maintain services
● As citizens pay taxes, they have access to use the
services including
○ Healthcare
○ Basic education
○ Social services
● Health care is provided for citizens throughout
their whole lives
● For adults health care is mostly free but they have
to pay small fees
3. The social security system
● Finland has good social security system which
is managed by Kela
● Social services provide help for everyday life
in many ways. They provide assistance and
help for various situations
● Kela handles social security services and
benefits, such as
○ the national pension, child benefit, basic
unemployment benefit, sickness and
parenthood allowance, and rehabilitation
● Every citizen receives a Kela-card
4. The history of Finland’s welfare system
● After becoming independent, Finland’s GDP was one of the lowest in the world
● Since then its growth has been very fast and the improvements in citizens’ lives
have been huge
● Nowadays Finland has one of the most advanced and the most comprehensive
welfare systems but the situation wasn’t the same hundred years ago
6. Basic information about taxation in Finland
● Who have power to levy taxes?
○ The State
○ The Municipalities
○ The Evangelic Lutheran Church
○ the Orthodox Church
● Direct taxes include state income tax,
capital tax, inheritance and gift tax,
and asset transfer tax, all payable to
the State
In Finland almost all income is taxed, as well as goods and services
7. Income-based tax rate
When calculating your taxable income,
take into account:
● tax allowances available if you are a
Finnish resident
● possible deductions for certain
types of expenditure
Also here is to pay: Church tax: 1 — 2%,
Municipal income tax: 16.5 — 22.5%
(depending on the municipality)
Taxable earned
income (€)
Tax on income
above the lowest
tax bracket (%)
16 500—24 700 6.5
24 700—40 300 17.5
40 300—71 400 21.5
71 400—90 000 29.75
90 000- 31.75
8. Value Added Tax
● VAT is a consumption tax that the seller
of goods or services will add to the
price.
● The seller thus collects this tax from
customers to remit it to the state.
● Liability to pay VAT concerns anyone
who sells goods and services, rents out
goods, or is engaged in similar
commercial operations on an ongoing
basis.
9. Commodities under heavy and low taxes
Low taxes
● Paid from products which benefit citizens
○ food
○ medicine
○ cultural activities
High taxes
● Paid from products which are harmful for
health or environment
○ From the consumer price of gas, over
64% are taxes. 24% of them are VAT
○ 60-80% of beer’s litre price consists of
taxes
11. Unemployment in Finland
● 8.7 % of Finland’s population is officially
unemployed, and that is around 234 000
people
● the percentage is actually bigger, because we
have over 100 000 “hidden’’ unemployed
persons that are not registered as
unemployed
13. Main reasons for unemployment in Finland
The main causes are:
● structural unemployment (when country is changing from industrial to services)
● frictional unemployment (the time between changing jobs)
● cyclical unemployment (less jobs during recession and more jobs during upturn)
● seasonal unemployment (ski resorts, Snow castle in Kemi)
14. Youth unemployment in Finland
● the unemployment rate among
young people (15 to 24-year old) is
22.7%
● such high rate is causing social
problems for individuals for
example
○ social exclusion
○ depression
● social problems burdens the
government due the rise of
welfare expenses
