Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.
Factsheet for measure FI-2022-49/2800 – measures in Finland
|Country||Finland , applies nationwide|
|Time period||Temporary, 01 December 2022 – 30 April 2023|
|Context||War in Ukraine|
|Type||Other initiatives or policies|
Responses to inflation
– Support for energy bills
|Author||Amanda Kinnunen (Oxford Research) and Eurofound|
|Measure added||05 September 2022 (updated 16 September 2022)|
Russia's invasion of Ukraine has affected Europe's energy supply and energy prices. The government of Finland stated in the most recent negotiations for budget amendments that a return to the old prices is unlikely to happen in the near future. Thus, the government has agreed to reduce the value added tax on electricity to counter the social effects of rising energy prices. In addition, the government of Finland is making preparations for an EU-level exception to the Energy Tax Directive 2003/96/EC in order to lower the VAT rate on electricity to lower than 10%.
The government decided to reduce the VAT rate on electricity from 24% to 10% for a limited period from the beginning of December 2022 until the end of April 2023. This is aimed at curbing the impact of rising energy costs on the daily lives of the citizens.
The measure is part of the Finnish government’s latest budget amendment, totalling the budget of 2023 to €80 billion and adding €8 billion of new fiscal debt. The Ministry of Finance has calculated that the reduction is expected to reduce government VAT revenue by an estimated €209 million.
The measure is a general measure targeting all citizens. The effects of the VAT reduction planned by the government on the energy costs of households will vary vastly depending on levels of consumption. Between December 2022 and April 2023 the household saving can vary from only a few euros to several hundred euros.
|Does not apply to workers||Does not apply to businesses||Applies to all citizens|
Social partners' role in designing the measure and form of involvement:
|Trade unions||Employers' organisations|
|Role||No involvement as case not in social partner domain||No involvement as case not in social partner domain|
|Form||Not applicable||Not applicable|
Social partners' role in the implementation, monitoring and assessment phase:
Case not in social partner domain.
The Finnish confederation of Industries (EK) has commented on the government’s budget stating that they understand the spending increases in exceptional circumstances. However, they remain critical to the increasing fiscal debt. Finnish Electrical Workers´ Union on the other hand had put forward a suggestion to reduce the VAT on Energy from 24% to 10% or even 5% already in August 2022.
Eurofound (2022), Temporary reduction on value added tax on electricity, measure FI-2022-49/2800 (measures in Finland), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/FI-2022-49_2800.html
30 January 2023
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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.