Trade Union News from Finland
Trade union confederations
critical of sizeable cut
in corporate tax rate
Helsinki (10.04.2013 – Heikki Jokinen, Juhani Artto) The coalition
government of Prime Minister Jyrki Katainen has decided to cut the corporate
tax rate from the current 24.5 per cent to 20.0 per cent.
The three trade union confederations (Akava, SAK, STTK) are not
happy with the decision for a number of reasons.
First, the government plans to finance the cut partly by raising taxes
for ordinary citizens. This can only have a negative impact on the
purchasing power of wage and salary earners,
which in turn will inevitably affect economic growth prospects.
“Competitiveness of business enterprises is naturally important for growth
and employment but wage and salary earners and the entire society also
urgently need measures that serve to increase purchasing power”, said Sture
the President of Akava, in considering the government’s choices.
Secondly, the government is prepared to grant companies and company owners
this tax-break without any quid pro quo….
without demanding any commitments from the corporate sector in return to
invest and create employment in Finland.
“Santa Claus came early to Eteläranta (the address of the powerful employer
confederation EK) this year”, was the comment of SAK’s chief economist Olli
Koski on the
Thirdly, by lowering corporate tax in an effort to be more competitive
the financial basis and funding of the welfare state will be undermined.
On Monday, Mikko Mäenpää, the President of the Finnish Confederation of
Professionals STTK, proposed that corporate tax rate reductions be
gradually extending up until 2017 instead of the proposed cut-off date 1
January 2014. This would mitigate the impact on
tax incomes and slow down the growth of public debt, he argued.
STTK’s chief economist
Ralf Sund warned that from past experiences of reductions in
corporate tax there was not much room for optimism.
Now, it is imperative for companies to demonstrate what they can do for
The government made its decision to cut the corporate tax rate as part of a
wider package aimed at promoting economic growth and employment and slowing
any increase in public debt. Union organizations have been highly critical
of the corporate tax
rate cut but a major row blew up over changes to taxes on dividends (part of
the capital gains tax). The proposed changes to taxes on dividends
were very favourable to many wealthy entrepreneur families. Unease
at this development also emerged from within the government parties and the
government had to revise its
decisions on the dividend tax.