The logo of the Finnish Tax Administration in Helsinki on 2 August 2023. The Finnish Business and Policy Forum (Eva) has calculated that an ordinary, relatively frugal taxpayer will see their total tax burden decrease by 564 euros in 2024 as a result of lower social security contributions and, to a lesser extent, tax cuts. (Eelis Berglund – Lehtikuva)
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AN ORDINARY, relatively frugal wage earner will pay more than 550 euros less in taxes in 2024 than 2023, reveal calculations made by the Finnish Business and Policy Forum (Eva).
The calculation defined the earner as a 53-year-old person living alone in Tampere. The person earns 3,500 euros a month, spends an average of 850 euros on utility bills, 60 euros on communications services, 450 euros on food, 100 euros on car use, 100 euros on alcohol, clothing, furniture and cleaning equipment, and 75 euros on insurance premiums.
The person also spends 600 euros on a single domestic trip a year.
Eva in December reported that such an earner will have a total tax rate of 37.5 per cent in 2024, equivalent to 1,313 euros a month. Over two-thirds, or 908 euros, of the tax burden arises from the income tax and 404 euros from consumption-related taxes, namely excise duties and value-added tax.
“If we assume no change in the wage and consumption of the example person, they will pay 564 euros less in taxes than this year,” said Emmiliina Kujanpää, a senior tax expert at Eva. “The sum is contracting largely as a consequence of lower social security contributions and partly as a consequence of tax cuts.”
In addition to the taxes and tax-like contributions paid by the person, their employer will pay 702 euros in employer contributions.
“Also employer contributions will decrease,” stated Kujanpää. “In the case of the example person, their employer will pay 41 euros less every month in contributions. This is not insignificant for hiring.”
Kujanpää also urged the government to continue alleviating the tax burden of ordinary citizens, with a focus particularly on income tax.
“This is the right direction,” she said. “In Eva’s example calculations, however, the labour tax remains two times higher compared with consumption taxes even though the labour tax inhibits economic activity more than consumption taxes.”
“The government intends to raise value-added tax rates in 2025. When you raise taxes on consumption, you should simultaneously lower labour taxes more substantially in order to redeem your campaign promises about shifting from taxing work to taxing consumption and harms.”
Aleksi Teivainen – HT
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Source: www.helsinkitimes.fi
