2. Finnish economy estimate
Expectation for Finland’s economy situation is growing up, because the figures are getting stronger. Rising is based
only for domestic demand. Even though Finnish economy is growing, it is still behind other EU countries. For example
GDP will not reach the situation before The financial crisis in 2009. Finnish Bank thinks that GDP will grow 1,1% in
2016 and 2017, but in 2018 1,0%. Finnish economy is about 0.2% of whole world’s GDP.
The growth of the economy is based on its productivity. That borns with new innovations and structural change.
Goverment’s lines for politics is to support those two.
3. Reasons for why finnish economy is low
There are many reasons why Finnish economy is still behind compared to
the EU.
The biggest reason why growth is not in sight is the industrial structure.
That is due to the fact that there is no production of consumer goods in
Finland.
Other reasons are restrictive labor regulations, high tax rates and tax
regulations.
Exportation will get better (and Finland’s economy as well) when the buyer
countries get their economy rising up
4. Finnish Government reform for 2017
Reform for 2017 is to get the employment rate to 72
per cent and make 110 000 new jobs for unemployed
people. How Finnish government will do this?
1. The Competitiveness Pact
2. By cutting off the welfare trap and reduce
structural unemployment
3. To promote local collective bargaining via
national collective agreement
4. Cut off employment obstacles
In other words, the government’s idea is to add
workforce and get more income taxes. With income
taxes the government have money to pay for social
benefits and services.
5. Kilpailukykysopimus aka
The Competitiveness Pact
The government’s one goal is to align
The Competitiveness pact and it
successfully started in 2017.
The Competitiveness Pact aims to:
● improve the competitiveness of
labours and businesses in Finland,
● boost economic growth,
● create new jobs,
● support fiscal adjustment, and
● promote local collective bargaining
via national collective agreements.
Agreement about
The
Competitiveness
pact.
6. Why The Competitiveness Pact
The Competitiveness pact was an alternative for forced laws. If it had been the forced laws,
there would have been 30 % cut from holiday pay and the first day of sick leave would
have been with out pay, for example. Also the 6th of January and Ascension Day would
have turned out to be free days without salaries.
How the
Competitiveness
pact is seen in
Finland.
7. Tax changes regarding to purchasing power
● Reduced taxation for wage earners
○ Apersonmaking3,305eurosamonthwillpay235euroslessinannualtaxestogetmore
purchasing power.
● Reduced taxation for pensioners
○ Apersonreceiving1,600eurosamonthinearnings-relatedpensionwillpay120eurosless
in annual taxes also to get more purchasing power
Tax changes regarding employment
● Domestic help credit will be raised five percent
○ For1,000euro’sworthofwork,theincreasefrom45to50percentwillbringa50-euro
benefit. Get more employment, because it is more cheaper for employer
8. ● Deductibility of interest paid on mortgage will be lowered by ten
percent
○ The deductable proportion will fall from 55 to 45 percent, meaning that
a 100,000-euro loan at 1.5 percent interest would qualify for 45 euros
less. Same as last one.
● Generational changes in businesses and farms promoted with reduced
inheritance and gift taxation
○ Tax on a 100,000-euro inheritance will go down by 800 euros, while a
tax on a 20,000-euro gift will go down by 170 euros. This is to help
younger people to get themselves grounded and to get more jobs..
● New entrepreneur deduction of five percent as business incentive
○ The change will bring a 50-150-euro benefit to smallest business owners
and a 1,700-2,900 benefit to larger businesses. It is one goal of the
competiticeness pact. That is because people would start their own
businesses more easily.
9. Other tax changes regarding for example from
Eu.
● Deductibility of interest paid on mortgage will be lowered by ten percent
○ The deductable proportion will fall from 55 to 45 percent, meaning that a
100,000-euro loan at 1.5 percent interest would qualify for 45 euros less.
● Tobacco tax will rise
○ The price of a pack of cigarettes will rise from 6 euros now to 6.50 euros next
year.
○ Also electrical cigarettes will come to the market and they will be taxed the
same way as cigarettes. This is based of EU’s given directive, which unifies
tobacco's taxation in different countries in EU.
● Tax on sweets eliminated
○ According to EU's commission in 2015, Finland's sweet tax is against the EU's
state aid rule and not right for competition. Finnish goverment eliminated the
tax for candy and ice cream.
10. Petrol tax will go up
○ A litre of 95 E10 petrol will become 2.5 cents more expensive.
11. PROPOSED APPROPRIATION CHANGES
● Cut in duration of unemployment security
○ Earning-related unemployment security will drop from 500 to 400 days. For people
with fewer than three years of experience on the job, the period will fall from 400 to
300 days. Point of this law would be to make a new job.
● Student financial aid will be cut
○ Payments of study aid to higher education students will fall by a maximum of 87 euros
monthly. Everyone’s social benefits are generally cut off.
● Study loan guarantee from the central government increase
○ Maximum loan amounts will climb from 400 to 650 euros per month.
12. ● Higher education students will be transferred to the general
housing allowance scheme
○ Housing allowances will be a maximum of 201 euros monthly with a partner’s income
having no affect on the sum granted. University students in Helsinki on the other hand
will receive a maximum of 400 euros per month, but their partner’s income will be
taken into consideration in judging the sum of the allowance.
● Early education fees for low-income families will go down
○ The payment for a single parent earning 2,200 euros monthly will fall by 59 euros a
month to just 33 euros monthly.
13. Budget losers
● Students
○ The study grant for university students will be cut 53-87€/month
○ Unemployment benefit will be removed which means -9-18€/day
● Families with children
○ Capital transfer tax will fall
■ 100 000€ inheritance tax will be 8 700€
■ 20 000€ gift tax will be 1 300€
○ Varicella vaccine will be free of charge
○ Almost all benefits of social insurance institution will cut 0,85%
14. ● Car owners
○ petrol will be more expensive by 2.5 cents a litre
○ the tax on owning a car will increase by 36 euros
● Owners of light motorised vehicles and boats
○ boats and light motorised vehicle will be taxed
● Farmers
○ will get crisis support 50 million euros but it isn’t enough
Budget losers
15. Budget losers
● Smokers
○ The tax on cigarettes will be tightened
● Unemployment people
○ Their duration of earnings-related unemployment benefits will be cut
○ Unemployment allowance will be cut 0,85%
● The government
○ At the end of 2017 government debt will rise to about 111 billion euros
16. Budget winners
● The government
○ The government will save 13.6 million euros and 80 000 working days (caused by parents
taking time off because of sick children) by investing in a chickenpox vaccination programme
○ Duration of earnings-related unemployment benefits will be cut, the government will save 69
million euros
○ The government will spend 180 million euros less than 2016 on asylum seekers
● People who are already doing well
○ the government decided to give them more betterment
● Senior citizens
○ will get 100 million euros in tax cuts
