The four-party alliance government led by conservative Kansallinen Kokoomus (National Coalition Party-NCP) on Tuesday announced further spending cuts and increase in the Value Added Tax (VAT) as a part its austerity measures.
Leaders of the Kokoomus, Perussuomalaiset (Finns Party), Suomenruotsalainenkansanpuolue (Swedish People’s Party of Finland-RKP) and the SuomenKristillisdemokraatit (Christian Democrats of Finland-CD) reached agreement on the budget framework for the years 2025-2028 after two days negotiation discussions ended on Tuesday.
The ruling parties´ leaders from a press conference after the meeting announced the cuts in various sectors including education and health and the decision to increase the VAT from 24% to 25.5%.
The government, which earmarked austerity measures of nine billion euros during its regime already took spending cuts of about six billion euros after taking over the office in June 2023.
Speaking at the press conference, Prime Minister Petteri Orpo said that the decisions of spending cuts and increase the VAT were taken in the budget plant to curb the rising state debt amidst the ongoing economic difficulties.
He said the government understood the people´s concerns and dissatisfaction over the decisions but took the decision considering the betterment of the country in the future.
The VAT for certain foods including chocolate will be also hiked from 14 percent to 25.5 percent while additional tax will be imposed on soft drinks, tobacco and some alcoholic products.
The government targeted to earn more than one billion euros through increasing the VAT.
The VAT on other food products including restaurant foods, however, will remain unchanged at 14 percent while the VAT on medicine, accommodation and cultural events will remain unchanged at 10 percent.
The prices of petroleum products will increase further after implementation of the increased rate of VAT by the end of this year.
The government also decided to increase income tax for some earning groups including the pensioners, who earn more than 23,000 euros annually.
Speaking at the press conference, Finance Minister Riikka Purra said that the government cuts included the allocations in the regional healthcare sector, known as wellbeing service counties and municipalities.
She said that the cut will take place in education and healthcare sectors but allocations for the army, police and Border Guard would not be reduced.
Source: www.dailyfinland.fi
Will the government provide any relief measures for the low-income households affected by these austerity measures?
Low-income households will be eligible for targeted relief programs to mitigate the impact of the austerity measures. The government is working on specific support initiatives to assist those most affected.
As a taxpayer, I find it concerning that the government is resorting to further austerity measures, including increasing taxes. While I understand the need to curb the rising state debt, I believe more consideration should be given to the impact these decisions will have on the citizens, especially in sectors like education and health.
As an ordinary citizen, I find it frustrating that the government is always resorting to increasing taxes and cutting essential services instead of finding more sustainable solutions. It feels like we bear the brunt of their mismanagement while they remain unaffected. Disappointing!
How will the increase in VAT from 24% to 25.5% affect the daily expenses of the people in Finland?
Hi JennaSmith87, the increase in VAT from 24% to 25.5% will likely lead to a slight rise in the prices of goods and services in Finland. This means that consumers may experience a slightly higher cost of living as a result of the VAT hike. It’s important for individuals and families to adjust their budget accordingly to cope with these changes. Let’s hope the government’s austerity measures bring the desired outcome for the country’s economy in the long run.
It’s truly disappointing to see the government tightening the belts on essential services and raising taxes yet again. These austerity measures may claim to address economic difficulties, but they only seem to burden the common people further. The decision to increase the VAT, especially on basic food items, hits the hardest on those already struggling to make ends meet. It would have been more prudent for the government to focus on promoting growth rather than squeezing the public even tighter.
Do you think these budget cuts and tax increases will actually help improve the country’s economic situation in the future?
Yes, I do believe that these measures, although tough in the short term, are necessary to stabilize the economy and reduce the state debt in the long run. Sacrifices are inevitable for progress.
It’s disappointing to see the government resorting to more budget cuts and higher taxes. It seems like the burden is always put on the ordinary citizens. I hope there are strategic plans in place to ensure this will actually benefit the country in the long run.
It is truly disappointing to see the government resort to more budget cuts and tax increases. While I understand the need to address the state debt, putting additional financial burden on the people through VAT hikes and sector cuts seems short-sighted. The leaders should strive to find more sustainable solutions that don’t disproportionately impact the citizens.
As a taxpayer, I am deeply concerned about the government’s approach of more budget cuts and tax hikes. It seems like the burden is always placed on the ordinary citizens, while the wealthy and corporations get away with minimal contribution. These austerity measures may further strain the already struggling population and push more people into poverty.
As a taxpayer, I am deeply concerned about the government’s approach to address economic challenges through more budget cuts and tax increases. It seems like the burden is always put on the citizens, while the real issues remain unaddressed. I hope the government reconsiders its strategy and prioritizes sustainable solutions that benefit all citizens.