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-2023-1/2802 – measures in Finland
|Country||Finland , applies nationwide|
|Time period||Temporary, 01 January 2023 – 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 introduced a measure package to assist citizens to cope with the high energy prices. In addition to the reduction in the value added tax on energy plans to introduce a four-month temporary electricity tax deduction on income taxation targeting lower-income taxpayers.
The government of Finland has announced a plan to introduce a four-month temporary tax deduction on income taxation for lower-income taxpayers. Only one person per household is eligible for the deduction. The details of the measure are still to be determined and the government has not yet elaborated on how the measure will work in practice. The electricity tax credit is aimed at people who pay enough tax to qualify for a household tax deduction, while a temporary electricity allowance has been announced for those paying little or no tax.
Although the deduction will not take place until the following years’ tax report, those eligible for the deduction can apply for a lower tax rate for 2023, thus having more household liquidity to cope with the high energy prices.
In the preliminary preparations, the deduction could be claimed if the household electricity bill exceeds €500 per month. Of bills above €500, 60% of the amount would be eligible for a deduction. The upper limit in the preparatory documents was set at €1,500. In the same model, the maximum amount that could be subsidised would be €600 per month and €2,400 per year. The subsidy would be available from January to April 2023.
The government has earmarked €300 million for the deduction in the latest budget amendment.
More than 100,000 citizens are expected to be eligible for the deduction.
|Applies to all workers||Does not apply to businesses||
People on low incomes
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:
No information available.
The leader of the Central Organisation of Finnish Trade Unions (SAK) underlines the it is important that there is a political response to the record high electricity bills. He states that support should be targeted to low-income earners and those hardest hit by the price hike.
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.
Eurofound (2022), Temporary tax deduction for high energy bills, measure FI-2023-1/2802 (measures in Finland), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/FI-2023-1_2802.html
30 January 2023
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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.