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Roundup: Finland to levy more taxes on higher-income earners

Xinhua, September 11, 2015 Adjust font size:

Finland plans to collect more taxes from higher-income earners as the Finnish government is preparing for next year's budget, said the government in a press conference on Thursday afternoon.

The budge proposal for 2016 totals 54.1 billion euros (60.97 billion U.S. dollars), including austerity measures that is expected to reduce central government spending and increase fee revenue in total by 0.8 billion euros.

The central government's tax revenue is projected to grow by roughly 2 percent, in which taxes levied on higher-income earners will increase the most.

The government said that it would like to bring the country's wealthiest to the cost saving campaign.

The threshold of the so called "solidarity tax" will be lowered from 90,000 euros per year to 72,300 euros, and the tax rate for capital income higher than 30,000 will be raised from 33 percent to 34 percent.

The solidarity tax was proposed to be levied on higher-income earners by the former Minister of Finance Jutta Urpiainen in February 2012. It has been implemented in Finland as a temporary surtax since 2013.

The downgrading of the lower limit of the solidarity tax is a temporary measure, which will be valid for two years from 2016 to 2017.

Finland's Minister of Finance Alexander Stubb said that the extension of the solidarity tax will bring about 34 million euros to the state, and raising tax on capital gain will contribute roughly 30 million euros.

"Our thinking here has been the fact that the costs of asylum seekers are rising," Stubb was quoted by Finnish national broadcaster Yle as saying.

The measures aiming to collect more money from the wealthiest have incurred some negative responses.

Teemu Lehtinen, director of the Taxpayers Association of Finland, criticized that the measure is a little step to the wrong direction, as the tax progression in Finland has been already very sharp.

In the opinion of the Federation of Finnish Enterprises, the cabinet's proposal will not encourage the growth of enterprises, and at the same time it will slow down the creation of new jobs, according to the Finnish News Agency STT.

In addition to increasing taxes on higher-income earners, the government said that the cabinet members will be on a one-week vacation without salaries, in order to shoulder their part in the saving campaign.

This gesture was welcomed by the Finnish Parliament. Maria Lohela, Speaker of the parliament, proposed that members of the parliament could have vacations without pays for two weeks, one week in the autumn and the other in the end of this year. Endit