Targeted measures to compensate for increased energy prices in Finland

The government has decided on temporary, targeted measures to alleviate the problems caused by soaring energy prices. [Shutterstock/Yevhen Prozhyrko]

The government has decided on temporary targeted measures to alleviate the problems caused by soaring energy prices. The measures focus on transport, agricultural entrepreneurs and households.

The measures include a temporary increase of the maximum deduction for travel expenses between home and the workplace from €7,000 to €8,400, Finance Minister Annika Saarikko, of the Centre party, announced on 18 February.

Also, the mileage allowance for commuting expenses when using one’s own car has been slightly increased. For professional drivers, the plan is to create an arrangement where “occupational diesel” would have a lower tax rate.

If allowed by EU law, agricultural production buildings will be temporarily exempted from real estate tax this year. Expenses from the energy crisis to agriculture will be compensated through other instruments in case negotiations with the Commission bring no results, the government promises.

Finland is not alone in trying to compensate increasing energy costs. More than 20 European countries have taken action, said Finance Minister Saarikko. According to her, the measures will decrease tax revenues, but will not increase government spending. The state will lose some €450 million in tax revenues.

The measures prepared in Finland differ from those in Sweden and Norway as they consider the households’ income and region. The goal is to determine a model where income support could be paid to households automatically if there is a spike in market prices. Energy prices could also be considered when granting social assistance to the lowest-income households.

The Finnish Business and Policy Forum (EVA) criticised the government’s plans. According to its economist Sanna Kuronen, price fluctuations are part of the market economy to which consumers must adapt. She points out that the price of fuel is not exceptionally high and its taxation has not risen. Instead of lowering fuel taxes, it would be wiser to lower-income taxation, recommends EVA’s Kuronen.

(Pekka Vänttinen | EURACTIV.com)

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