The Prime Minister's Party presents three ways to make everyday life easier – especially pensioners and families with children as beneficiaries

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SDP hopes that the government will decide at the beginning of the fall on the reduction of income tax for low and middle income earners. Antti Lindtman (sd) tells what means SDP would use to curb the effect of rising prices. Elli Harju, Heidi Heikkilä[email protected] at 8:00 (edited at 8:11)

The Ministerial Party presented three ways to make everyday life easier – especially for the living and families with children

  • The chairman of the parliamentary group, Antti Lindtman, tells in an interview with Iltalehti about the three ways that SDP proposes to the government.
  • The measures are meant to ease the financial situation of Finns when prices rise.
  • If the proposed measures are implemented, the state will take on even more debt.

The prime minister's party SDP wants to make everyday life easier for Finns in three ways, says the chairman of the parliamentary group Antti Lindtman.

Consumer prices in Finland have risen by 8 percent per year, and it can be seen in many people's bank accounts – the income is no longer enough to live in the same way as before.

The government will consider in August–September how it will compensate for the effects of rising prices. SDP proposes three ways: reducing early childhood education fees, increasing the travel expense deduction for those who travel long distances to work, and reducing earned income taxation for low- and middle-income earners, including pensioners.

The government responded to the rise in prices already earlier this year by making an early index increase for social benefits and increasing the commuting deduction.

– When the situation has continued, it is clear that additional measures are needed, Lindtman tells Iltalehti.

< p> The Prime Minister's Party presented three ways to make everyday life easier – benefiting especially the elderly and families with children

SP parliamentary group chairman Antti Lindtman says that the party will publish a program on ways to respond to inflation at its summer meeting on August 17. The three methods just presented are included in the package. Heidi Heikkilä

“I won't rule anything out”

Next week, the Ministry of Finance will discuss its proposal for the state budget for 2023. In early August, the government's most important ministers will return from their summer vacations. The government will make the final decisions during the budget rush at the beginning of September.

The background of the rise in prices, i.e. inflation, is most strongly influenced by Russia's war of aggression in Ukraine, and the consequent reduction in energy trade from Russia.

According to Lindtman, SDP will bring at least the mentioned three methods to the negotiating table. During the summer, the parties have also hinted at the reduction of food value added tax and fuel tax.

– I say that at this stage I am not ruling anything out, Lindtman comments.

Lindtman says that at the beginning of August, it will be good to hear from the Ministry of Finance an opinion on what kind of leeway is being sought for the package corresponding to the effects of inflation.

– I would like to put all means on the table and see which are the most effective. From this point of view, I believe that these [SDP's] actions will be successful.

Iltalehti met Antti Lindtman at his home in Tikkurilantori, Vantaa. Heidi Heikkilä

Justifications for the means

In Lindtman's opinion, the measures proposed by the SDP, aimed at certain population groups, are overall more effective alternatives than, for example, general tax reductions on gasoline and food.

First of all, the measures should be aimed at those who suffer the most from the rise in prices, says Lindtman. SDP wants to target measures on low and medium incomes, pensioners, long commutes and families with children.

Second, in SDP's actions, the financial relief would go directly to the people, in contrast to lowering food value added tax or gasoline tax, in which case a grocery store or gas station can decide whether the tax reduction will be passed on to prices.

Thirdly, Lindtman justifies the actions by promoting employment. Lowering daycare fees and compensating commuting expenses encourage people to take up work.

– Daycare fees in the toddler phase, especially for mothers, significantly weaken the incentives to go to work, Lindtman says.

Reasonable costs

Lindtman's fourth justification for SDP's actions is reasonable costs to the public finances.

The government already increased the travel expense deduction for this year from 0.25 euros to 0.30 euros per kilometer. According to Lindtman, the increase should be maintained next year as well, and it could be considered to raise it to 0.35 euros. The price tag for each 5-cent increase has been calculated to be 140 million euros per year.

Regarding day care fees, Lindtman says that with a “moderate” public financial cost of 100 million euros, for example, a nurse or a teacher in a family with two children in day care , could halve the daycare fees, and at the cost of 150 million, push the fees even close to zero.

In practice, the calculation of earned income taxation would be done by calculating the work income deduction and the basic municipal tax deduction, says Lindtman. He still doesn't have an answer to how big the percentage units are in the tax sale.

– By far the majority of Finnish wage earners would benefit from this. But when we start with incomes over 100,000 euros – even though the price increase affects everyone – it is clear that the waiter is more in trouble here than the CEO. Therefore, these are means that should be used.

Antti Lindtman turns 40 on August 11. The father of a small child says that the age crisis hasn't come yet, and actually hasn't had time to come. On his birthday, Lindtman organizes a charity run at his home in Tikkurila. Heidi Heikkilä

More debt?

Already in light of the government's previous decisions, Finland's indebtedness will continue in the coming years.

If such means were introduced, would it mean that the state would take on more debt?

– Yes, these certainly have an impact on the public finances, Lindtman says.

The indebtedness effect of the three methods presented, according to Lindtman, is hundreds of millions. He points out that, for example, tax breaks for fuel and food are talking about billions.

In addition, Lindtman justifies that the state has received more tax revenue as prices rise, and SDP's measures have also been estimated to have effects that improve the population's purchasing power and Finland's employment and competitiveness.

The current government has received criticism for taking on a large amount of debt. and the inability to make savings. Lindtman assures that there is concern about the sustainability of the public finances.

Lindtman says that it is important for the SDP in the budget scramble that the previously agreed austerity measures are adhered to, the main focus is on growth and employment, and that the green transition implemented.

– In the past, it was thought that there would only be costs from the green transition, but now there will be costs where the transition has been postponed, says Lindtman.

Election budget?

The government is now making its last budget, because there are parliamentary elections in the spring and the government is changing. In its editorial this week, Iltalehti estimates that the government's “temptation to make an election budget is exceptionally great”.

Calculating income tax has received criticism from economists: it is expensive, and a reduction in income taxes that increases aggregate demand can accelerate inflation.

– All actions have some effect on inflation, but now a balance must be sought in that the effect on inflation is as small as possible and the impact on people's wallets as large as possible. With this balance in mind, these measures have now been made, Lindtman says.

Is such an income tax reduction made because the election is coming?

– I present these means precisely because inflation, the rise in prices eats away at citizens' purchasing power. Apparently, it doesn't look at the election schedule. I think it's clear that if this kind of inflation, price rise or Russian aggression hadn't happened, we would be talking about completely different things in the budget tussle, Lindtman answers.

Lindtman hopes that a compatible solution will be found for the reduction of earned income taxation even in the fall with the private sector salary solution.

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