“Now we need mutual trust.”
Saarikko pointed out that the combination of substantial wage increases and income tax cuts would be dangerous, as it could further accelerate the rise in consumer prices.
Juha MajanenOn Wednesday, the permanent state secretary of the Ministry of Finance defined moderate salary increases as increases in line with next year’s expected inflation. The rise in consumer prices is currently predicted to slow down to around three percent in 2023.
The key question in the negotiations is whether, to what extent and how households should be compensated for the rise in consumer prices.
Island told Helsingin Sanomat in mid-June that the government would decide in its budget session on income tax reductions to strengthen the purchasing power of households. He has since agreed with the views of the ministry’s officials that the government should abandon tax reduction decisions already in the early autumn and set conditions for them.
He is also critical of the idea of lowering taxes on food or gasoline, judging that large tax cuts are generally not sensible from a public finance perspective. However, smaller tax incentives, such as extending the maximum deductions for work-related travel expenses, are worth discussing.
“We are currently very cautious about the use of debt for a broad tax relief. There is plenty of use for tax revenues in an aging country.”
Saarikko said that he had asked the authorities to figure out ways to respond to the rise in electricity prices and emphasized that responding to energy-driven inflation is challenging, especially in the current situation.
“Nobody has the right or certain answers. We are evaluating all the tools at these times. We cannot make decisions that would eliminate the upward trend in prices. But we have to make sure that the measures do not at least worsen the upward trend in the measures,” he commented.
The Ministry of Finance will finalize its budget proposal on Thursday and publish it on Friday. The government meets for its budget session at the turn of August and September.
Saarikko tweeted last night that he proposes that all families with children be paid an additional installment of child allowance at the end of the year, in order to alleviate the financial pressure caused by the rise in food, energy and transport prices. According to him, the measure would not require an additional loan and it could be financed from the additional budget.
“Rising food, energy and transportation costs have taken their toll on families with children, who use most of their income to support their daily lives,” he wrote. “Child allowance is not linked to an index, which means benefits do not automatically increase with the cost of living, unlike many other benefits.”
The Finnish government has already taken steps to help households cope with the rise in consumer prices.
The situation of pensioners and other income transfer recipients was made easier by the increase in social security benefits based on the national pension index at the beginning of August. Accordingly, the maximum amount of tax-deductible work-related travel expenses has been temporarily increased for this tax year.
Aleksi Teivainen – HT
Source: The Nordic Page