The Finnish government has proposed scrapping its wealth tax alongside further reductions in tax on labour, in a package of tax cuts worth EUR1.7 billion which are aimed at making the economy more competitive.
Under the government’s plans, the wealth tax, which contributed EUR170 million to the state budget in 2005, will be abolished by 2006, by which time half of the proposed tax cuts are expected to be in place.
Finance Minister Antti Kalliomaki told a news conference: "The wealth tax has been abolished in many other countries, so (scrapping it) is partly done for competition reasons. Also, we thought it could support investments."
The new proposal will mean that the government has cut taxation by EUR4 billion since 2003. Analysts have been somewhat surprised by the scope of the tax cuts, although some experts believe that Finland still needs to cut the top rate of personal income tax.
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