The Government’s draft budget pushes Finland deeper into debt swamp: massive tax cuts are irresponsible

The Government of Finland proposes reducing corporate tax paid by companies by two percentage points. The current corporate tax rate is 20%, and companies pay less taxes in Finland than in many other EU countries.

The Ministry of Finance estimates that this tax cut is going to cost the state more than 800 million euros per year.

“This sum would cover paying for road repairs and the increase in wellbeing services counties’ funding in 2027. One has to ask how Finland can afford such loss of revenue at the same time when fundamental public services are ruthlessly hammered,” says the President of Trade Union JHL Håkan Ekström.

The bill for the tax cut will be paid from Finland’s public purse by everybody in Finland, but studies show that the benefits will go to those with the highest earnings.

The current Government’s last draft budget shows a deficit of almost 13 billion euros, which will be covered through borrowing. The Government of Prime Minister Petteri Orpo (National Coalition) has already taken on more new debt for Finland than the previous Government did during its entire term. Although the Government pushed through the act on the so called debt brake in late 2025, the country’s mountainous debt just keeps growing.

The debt brake requirements and a corporate tax cut that comes close to a billion euros don’t sit well together. Experts including the Finnish Economic Policy Council advise that the Government should take action to strengthen the public finances and refrain from actions that weaken them. A massive tax cut is precisely the kind of action that should be avoided.

This Government has made during its term huge cuts for example in social security and public services. The cuts were justified by warning that Finland was heading for EU’s excessive deficit procedure. Now that Finland is in the procedure, it seems as if debt no longer matters.

“The Government has pushed Finland deeper into the debt swamp. At the same time, Finland’s unemployment rate is at grim levels and fundamental public services are scaled back. The Government should finally understand that Finland’s course cannot be changed through cutbacks and tax reductions. Irresponsible tax cuts like the reduction of corporate tax should be cancelled, and instead the state revenue should be strengthened by limiting index adjustments to earned-income tax only to low- and average-income brackets,” Ekström stresses. 

More information:

Håkan Ekström, President of JHL, 040 828 2865