Finland’s Centre-Left Coalition Reaches Deal With Centre Party; Unveils Progressive Government Program
Guest Post by a Member of the Swedish SAP: The centre-left coalition that won the 2019 elections (Social Democrats + Left Party + Greens + Swedish People’s Party) has reached an agreement with the Centre Party to form a government for the next 4 years. The absolute final details will be hashed out this week, but overall it’s looking pretty good:
Proposals include tax increases and permanent increases in baseline spending plus one-off investments to boost pensions (€180 million) , environmental measures, investments in railways and roads, education, income redistribution, healthcare, and elderly care. Baseline spending will increase by €1.2 billion (doesn’t sound like much, but remember that Finland is a small country with a €56 billion government budget), while other investments will total some €4 billion.
Proposed €730 million tax increases include: a 5% tax surcharge on dividends that are paid to foreign funds, new capital gains tax on proceeds from real estate sales that benefit foreign investors, €250 million in new fossil fuel taxes, €30 million increase in taxes on electricity consumption by mining industry, €250 million increase in alcohol and tobacco taxes, unspecified new mining tax and unspecified new tax on sale of mining rights to foreign companies. The mortgage interest deduction will be eliminated. Tax credits for low-income earners will increase. Some state assets will be sold off to fund one-off expenditures.
€200 million of already-approved spending will be shifted (not many details given), other environmental taxes will be finalized this week. The coalition has committed to a carbon-neutral society by 2035. Congestion tolls will also be implemented in urban areas. Modifications to income tax tables and inflation calculations will also be finalized.
The government aims to create 60,000 jobs to lower unemployment and raise the employment rate from 73% to 75% (which hopefully will generate more tax revenues from working & spending). The government has committed to no meaningful increase in the national debt over the next few years, so meeting the employment goals and maintaining 1.5%-2% GDP growth is crucial to avoid jeopardizing the new programs. The government’s small budget deficit will be expanded somewhat.
The agreement also includes improvements to sexual assault laws, such as scrapping the requirement that prosecutors prove that an assault was violent. Finland’s air force will also purchase new fighter jets in 2021. Funding for agriculture and rural development will be preserved. Finland’s organization into 18 provinces will be preserved, even if it is somewhat wasteful (this was a major Centre Party demand).
The coalition will have a solid 117 seats in the 200 seat parliament, giving it a strong chance to last until 2023.
There were some compromises made due to the Centre Party’s demands: the pension increase was originally planned to be much larger, tax increases were supposed to be a bit more progressive, and the ban on fur farming will not happen.
But at the end of the day, this is still a very progressive agreement, and a welcome U-turn from the neoliberal austerity of the past 4 years under Juha Sipliaa.