Chairperson of the Finns Party, Riikka Purra. LEHTIKUVA
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Finland’s government will not pursue increased immigration as a means to support economic growth during the remainder of its term, Finance Minister Riikka Purra confirmed on Wednesday.
Instead, the government is focusing on alternative strategies for growth as it prepares for upcoming fiscal framework negotiations. These include changes to tax policy and new measures aimed at improving productivity and economic output.
Speaking to Yle, Purra dismissed calls from major economic interest groups and government-appointed experts who have urged an increase in labour-based immigration. “The government will not take measures to increase immigration,” she said.
Earlier this year, the Confederation of Finnish Industries (EK) called for a net annual inflow of 45,000 foreign experts to offset workforce shortages. The proposal was echoed by a taskforce led by Varma CEO Risto Murto, which advocated for a controlled expansion in international student numbers and targeted recruitment of highly educated professionals from abroad.
While those recommendations have gained traction among business leaders, the government has chosen to take a different path.
According to Purra, the cabinet is considering tax cuts as one of its core economic tools. Helsingin Sanomat reported that reductions in earned income taxation are under review. Purra confirmed this, but declined to reveal which income brackets would be affected.
“There are no details to disclose yet,” she told Yle. “I’ve long maintained that the tight taxation on wage earners’ income needs to be addressed.”
The government is also reviewing the possibility of lowering marginal tax rates for top earners. A February study from the Research Institute of the Finnish Economy (Etla) concluded that high marginal tax rates discourage work and limit economic output more than previously assumed.
Coalition parties reportedly differ over which income groups should benefit from the proposed tax cuts. Some parties have called for broad-based reductions across income levels, while others favour targeted relief for higher earners.
“There are four parties in the coalition, each with its own interests,” Purra said. “Inevitably, compromises will be made, and hopefully the outcome will be a good one.”
The budget talks are taking place amid weak growth forecasts and strict targets for public finances. The government remains committed to stabilising the national debt-to-GDP ratio by the end of its term.
“If we introduce growth measures that cost money, such as tax cuts, we must also be able to finance them in the short term,” Purra said.
While some economists argue that cutting taxes for high-income earners could stimulate economic activity and eventually offset lost revenue, Purra stressed that any such effects must materialise quickly.
“Our fiscal targets are tied to this term,” she added. “That means we need to see results within a tight timeframe.”
HT
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Source: www.helsinkitimes.fi
