A surplus from unemployment insurance contributions being held by the national Employment Fund will be used to ease taxes for both employees and employers, Prime Minister Petteri Orpo (NCP) has stated.
Speaking on Yle TV1's A-Talk discussion programme on Thursday evening, Orpo pledged that tax cuts for wage earners will be forthcoming in the cabinet's next round of budget talks.
These planned reductions are to be financed with a 1.4 billion euro surplus in the national Employment Fund, which has accumulated from lower expenditures due to the positive employment situation in the Finnish labour market.
The Employment Fund finances costs such as earnings-related unemployment benefits, adult education allowances, pension benefits and national Social Insurance Institution benefits. The fund, in turn, is financed by unemployment insurance contributions from employers and employees.
"As the fund has suggested, a 0.7 percentage point reduction in unemployment insurance contributions will basically be divided equally among all wage earners and employers," Orpo explained.
He added that the proposal by the Employment Fund will be rolled out, but some other taxes may rise.
Asked whether the general level of taxation will go up, the prime minister said that the details will have to be examined, noting further that the government intends to draft a comprehensive tax package when when budget talks begin next week.
Opposition: High earners benefiting most
During the same televised discussion, opposition Social Democratic Party (SDP) leader Antti Lindtman challenged Orpo over the government's tax policy.
"The fact that you claim your tax cuts are aimed at low and middle income earners, that claim does not stand up to scrutiny," Lindtman said.
Lindtman also slammed the government's plan to adjust the so-called solidarity tax paid by high earners. This tax adds two percentage points to the tax rate for anyone making more than 85,000 euros per year. The government programme aims to lift the threshold for that tax to 150,000 euros, saving high income wage-earners thousands of euros.
"The biggest tax cut of all, both absolutely and relatively, will be for people in the prime minister's income bracket," he argued.
Lindtman asked Orpo who he thinks has a high income, if the government considers someone making 14,000 euros a month to be a middle income earner.
"I don't think this increase in the lower limit of the solidarity tax will even affect my income," the prime minister replied.
In return, Orpo asked Lindtman if the SDP intends to support a reduction in unemployment insurance contributions. The SDP leader did not give a direct answer.
"The development of employment has been good and it is natural when this is the case that it is possible to make this cut. We will take a position on the whole tax package in our own alternative proposal when we see the whole picture," said Lindtman.
