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Tax Cuts In Finland's 2017 Budget

by Ulrika Lomas, Tax-News.com, Brussels

12 August 2016


Finnish Finance Minister Peter Orpon has presented a draft Budget for 2017, which attempts to strengthen economic growth and employment with tax cuts.

According to the Budget outline, published by the Finance Ministry on August 12, employment taxes will be cut by EUR415m (USD463m) in 2017, while pension taxation will be reduced by EUR100m.

Reducing taxes on work has become a priority for Finland, which has the highest "tax wedge" on labor in the OECD grouping.

In its most recent Economic Survey of Finland, the OECD warned the Government that it will struggle to meet its unemployment reduction targets unless work incentives are made more attractive.

The OECD recommended that Finland reduce taxes on labor, to improve work incentives, and raise recurrent taxes on personal immovable property and indirect taxes. The report also said there should be a reduction in the number of products subject to lower VAT rates.

While Orpon has rejected calls for a corporate tax cut as a means to boost Finland's tax competitiveness, the 2017 Budget provides for an increase in the amount of losses than limited liability companies can deduct against income.

The final version of the 2017 Budget is due to be published on September 19, following parliamentary debate in late August and early September.

TAGS: Finance | tax | pensions | budget | unemployment | Finland

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