Ministry of Finance’s budget draft an investment in growth, security and self-sufficiency


THE MINISTRY of Finance unveiled its budget proposal for next year on Thursday.

Helsingin Sanomat on Thursday wrote that the ministry is calling for a one-year extension to the raise in the maximum income tax deduction granted for work-related travel expenses and that the decrease in the obligation of transport fuel distributors to supply a certain percentage of biofuels .

The maximum travel-expense deduction has been raised from 7,000 to 8,400 euros for this year and the biofuel distribution obligation lowered to 7.5 per cent for this and next year.

The Ministry of Finance is proposing that police appropriations be raised by 18 million euros compared to what was decided in the framework session of this spring and that 780 million euros be set aside to help and promote the integration of people fleeing the war in Ukraine. Appropriations of about 220 million euros would be earmarked for promoting clean technologies, security of supply and energy self-sufficiency.

Appropriations for the Ministry of Defense and Finnish Border Guard would be raised by roughly one billion euros in accordance with a decision made in the spring. An additional 56 million euros would be directed at improving preparedness for cyberthreats.

The Finnish government is scheduled to convene to draft its budget for 2023 at the turn of August and September.

Minister of Finance Annika Saarikko (Centre) on Thursday described the budget proposal as an investment in growth, security and self-sufficiency, adding that it necessitates the breaking of dependence on fossil energy and Russian energy.

The economic outlook, she acknowledged, is far from bright. “It’s quite justified to call this a frost warning.”

With expenditures of 79.5 billion euros and a deficit of 6.3 billion euros, the draft budget would increase the central government debt burden to 144 billion euros by the end of next year, accounting for 52 percent of gross domestic product. The interest costs on government debt are projected to almost double from the current year and amount to 1.3 billion euros in 2023.

Saarikko pointed out that the total value of the budget is affected by a shift in the structures of public economy caused by the start of operations by the well-being services regions.

The budget draft forwards no proposals on income tax cuts. Saarikko last week appeared to backtrack on her previous estimate that the tax cuts could be a means to mitigate the effects of inflation on households. She viewed yesterday that the scope and timing of the possible cuts should be discussed by the government.

“We’ll set that idea aside for further consideration and monitor how the economy develops. We’ll get our hands on new economic forecasts in the coming few weeks.”

She is also proposing that an additional installation of the child benefit be paid to families with children before Christmas. The government, she added, should conduct a study into the possibilities of lowering electricity prices by the budget session.

“I think it’s warranted that we examine, among other things, the value-added tax on electricity, the situation of electricity suppliers and make sure electricity suppliers act responsibly in this situation,” she said.

Saarikko also revealed that she has discussed the staff shortage in social and health care with officials at the Ministry of Finance. While she declined to make any proposals yesterday, she voiced her hope that concrete and implementable measures are found before the budget session.

Using Ukrainians coming to Finland as part of the solution is an intriguing idea, according to her.

Aleksi Teivainen – HT

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