Very few Finnish municipalities will be raising their taxes this year, according to representatives of the Association of Finnish Local and Regional Authorities. The decision to not do so comes despite the fact that the coronavirus pandemic has put an enormous dent on many local budgets which will be hard to patch up without additional funding. Nonetheless, municipal governments appear to be confident that raising levies is not the way to go – at least for 2021.
Letting the economy recoup as fast as possible
In 2020, of the nearly 300 municipalities of Finland, 50 local governments decided to raise taxes, 7 lowered them, while the rest kept them the same. In 2021, these figures will most likely change in favour of those deciding to keep taxation as is, according to the Association of Finnish Local and Regional Authorities’ Chief Economist Minna Punakallio, who believes that governments are unlikely to resort to tax hikes to stem the bleeding of their cities’ budgets.
Raising taxes is always something difficult for any government and politician that wants to remain in power and to get reelected. And thanks to the government’s support for local and regional authorities over the last few months throughout the COVID-19 pandemic, many officials now believe that they can get away with it, without risking their cities’ finances.
Furthermore, raising taxes to patch up public budgets would mean for many businesses and individuals to go bust or be unable to cope with the increased strain on their financial activities. This would severely hamper Finland’s economic recovery from the pandemic and is ill-advised for any community that want to get back up on its feet as quickly as possible.
The good news, however, end here. According to the Chief Economic, taxes will eventually have to be raised in the following years as the state aid provided by the Finnish government will eventually run out – leaving municipalities to fend their financial woes on their own.
Source: TheMayor.EU
