Prime Minister
Sanna Marin’s proposal to increase municipal tax rate progressivity would hit individuals earning more than 4,000 euros per month, reports Helsingin Sanomat on Saturday.
Marin made the suggestion at an Yle election debate earlier this week when she noted that high earners could play a bigger role in funding municipal services.
Minna Punakallio, a chief economist at the Association of Finnish Municipalities, told HS that Marin’s suggestion would demand a broader taxation rethink to prevent incentive traps. Because Marin’s goal is not to raise the level of overall taxation, this change would target people making 50-60,000 euros a year and more, she said.
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Nearly all Finnish municipalities ended 2020 in the black due to coronavirus subsidies from the central government.
Just 27 municipalities in mainland Finland had budget deficits last year. In the previous year, the figure was 223.
The country has 310 municipalities, including 16 mostly small ones in the autonomous Åland Islands.
Even those municipalities that went into the red generally had modest deficits of a few million euros, the Association of Finnish Local and Regional Authorities (AFLRA) said on Wednesday.
Altogether the state paid municipalities about three billion euros in coronavirus subsidies.
All told, local authorities reported surpluses of about 1.7 billion euros last year. AFLRA chief economist