Minja Koskela (LA) was photographed in the Parliament House in Helsinki in April 2023. Koskela on Thursday voiced her concern about the draft budget unveiled by the Ministry of Finance, warning that it will increase indebtedness and unemployment while making sure tax revenue will fall even more short of projections. (Heikki Saukkomaa – Lehtikuva)
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THE OPPOSITION has levelled criticism at the 88.1-billion-euro budget proposal unveiled last week by the Ministry of Finance.
“The right-wing government’s oversized and unjust cut policy will deepen the economic recession. Instead of the promised 10,000 jobs, unemployment and indebtedness will increase sharply and tax revenue will fall more and more short of forecasts,” commented Minja Koskela (LA).
The Ministry of Finance on Friday unveiled a budget proposal that shows a deficit of 12.2 billion euros. The draft will serve as the groundwork as the four ruling parties meet to thrash out the budget for next year in early September.
Minister of Finance Riikka Purra (PS) stated a day earlier that the ruling parties will not adjust their cost-saving target despite the wider-than-expected budget shortfall. Additional cost-saving measures, though, are nonetheless necessary because some of the earlier measures have failed to have the desired impact.
The budget is to deliver tax rises of over a billion euros, mostly through the value-added tax. Koskela on Thursday estimated that the decision to focus on the value-added tax is unjust and economically detrimental.
“For ideological reasons, the government has shot down proposals to, among other things, revamp the dividend tax and is instead raising the everyday costs of low and middle-income Finns. The billion-euro value-added tax hike to be carried out amid a wave of bankruptcies will leave especially many small companies and the culture sector between a rock and a hard place.”
Also trade unions have expressed their concern about the impact the budget draft could have on low-income households.
Ilkka Kaukoranta, the chief economist at the Central Organisation of Finnish Trade Unions (SAK), argued on Thursday that by slashing the purchasing power of low-income earners and pursuing divisive labour market policies, the government is undermining economic growth.
“Balancing public finances will also require economic growth,” he said.
Koskela also questioned the cost cuts targeted at education and social and health care. Employers in the social and health care sector, she reminded, have warned the government that withdrawing support from adult education will curtail labour availability.
The cuts in education spending are a concern also for SAK.
“The cost savings will require people to change their line of work and complement their skills. There is a risk that the cuts will undermine the availability of skilled labour and employment in the longer term. As careers become longer and working life evolves, it is important that you can complement the vocational education you chose at the age of 15 with another degree, if necessary,” argued Kaukoranta.
The government, he viewed, could have instead chosen to consolidate the public economy by raising taxes on dividends paid out by unlisted companies and by scrapping tax subsidies for, for instance, entrepreneurs and voluntary forest protection.
Antti Kaikkonen, the chairperson of the Centre, pointed out that the cuts are being made all the while the government is insisting on spending on projects such as the high-speed rail link between Helsinki and Turku.
Advocated forcefully by Prime Minister Petteri Orpo (NCP), the rail infrastructure project has caused unease also within the ruling coalition.
“The minister of finance offered numerous explanations for why borrowing is increasing. I would be interested in hearing not explanations but, finally, measures that double economic growth from forecasts. The government seems to be lacking a growth policy that promotes work and entrepreneurship,” stated Kaikkonen.
“I’m surprised that the government insists on sticking to its subsidies to private health businesses, to the tax breaks targeted at high-income earners, and the one-hour train to Turku. Orpo and Purra are not addressing these massive money pits.”
Aleksi Teivainen – HT
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Source: www.helsinkitimes.fi
