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Finland Considers COVID-19 Tax Increases

by Ulrika Lomas, Tax-News.com, Brussels

28 May 2020


On May 8, 2020, the Finnish Government published a report which explores the economic and fiscal consequences of the COVID-19 pandemic for Finland and considers what taxes could be increased to help restore the public finances.

The report observes that Finland already has one of the highest tax burdens in the world, especially on labor. Therefore, raising taxation poses the risk of damaging Finland's competitiveness, it warns. Nevertheless, the report identifies certain taxes where there is scope for revenue increases without threatening the economy. These are:

  • Property taxes, because these tend not to be economically distortive and affect largely wealthier taxpayers;
  • Corporate tax, with scope available to reduce the tax advantages of unlisted companies;
  • Environmental taxes, with the taxation of fossil fuels increased further;
  • Value-added tax, focusing on reduced VAT rates rather than the standard rate.

While the report's authors state that the exact size of the necessary post-COVID fiscal adjustment is currently unclear, it is likely to be in the range of three to four percent of GDP to stabilize Finland's debt-to-GDP ratio below 90 percent in 2020.

TAGS: environment | tax | value added tax (VAT) | property tax | real-estate | corporation tax | environmental tax | transfer pricing | carbon tax | Finland

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