New income tax increases proposed by Finnish Prime Minister Matti Vanhanen could result in those who earn over EUR 47,000 a year facing significant rate raises.
Vanhanen, speaking at a Centre Party delegate council meeting, called for the tax increases to come into effect on high income earners for a period of five years once the current economic recovery has stabilised.
Helsingin Sanomat reports that Vanhanen further outlined his proposal by explaining that the increases would be applicable to the top ten percent of Finnish income earners. The proposed rise would not, however, apply to the top tier of very wealthy Finns which number around 260,000.
The National Coalition Party’s Minister of Finance Jyrki Katainen has spoken out against the Prime Minister’s proposal. “If we did that, taxation of earned income and capital gains would diverge even more,” said Katainen.
Vanhanen has stated that his wish is for higher income earners to contribute an additional EUR 200 million into state coffers each year. This would equate to around EUR 770 annually for each person that falls into this bracket.
Vanhanen also aims to collect an additional EUR 2 billion in further indirect taxes. To do so through the VAT system would mean a rise of four percentage points, although the Prime Minister has claimed that increases on energy and environmental protection taxes would contribute. Given that such taxes are applicable to all income earners, Vanhanen has said that it is appropriate that higher income earners are subjected to increased taxation.
Vanhanen has stated that the proposed increases would come into effect after the recession, namely when the next government has taken up office. Finnish parliamentary elections are currently scheduled for 2011.
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