Finland’s tax revenues drop for first time since 2008 financial crisis

HELSINKI (XINHUA) – Hit hard by the COVID-19 pandemic, Finland’s tax revenues have decreased for the first time since the 2008 financial crisis, the Finnish Tax Administration said on Friday.

According to the Tax Administration, by the end of August this year, Finland’s state tax revenue was EUR1.9 billion (USD2.2 billion) lower than one year earlier.

In recent years, tax revenues have increased by at least EUR0.5 billion compared to the preceding year.

Last year, Finland’s Ministry of Finance projected tax revenues to grow as usual in 2020.

However, the ministry’s economic advisor Veliarvo Tamminen told national broadcaster Yle that “when the reality of the COVID-19 situation began to dawn… first in late winter and then in early spring, we forecasted that tax income would not increase this year”.

Tamminen pointed out that setbacks are still possible and people in Finland might change their consumption behaviour, even if no new restrictions are introduced.

“If the epidemic worsens, consumers may react by reducing consumption in stores and restaurants.”

According to Tamminen, this year’s corporate tax income is expected to be EUR800 million less than in the same period of 2019. Therefore, greater spending and lower incomes will generate a shortfall that will be filled by some EUR17.8 billion in debt.

Finland’s government debt surpassed the EUR100 billion threshold for the first time at the beginning of this year, according to Yle.

In mid-September, when the government unveiled a spending package for 2021, total government debt was estimated to increase to EUR135 billion next year.