Minister of Finance Annika Saarikko has announced a series of temporary measures aimed at easing the impact of higher energy costs.
The Finnish government has outlined a series of temporary measures in response to rising energy prices.
Minister of Finance Annika Saarikko (Cen) told a press conference that the most effective measure will be an increase to the maximum deduction taxpayers can file for travel to and from work.
The maximum deduction in travel expenses for commutes between home and jobs will be temporarily increased from 7,000 to 8,400 euros. The increase will be applicable to the current tax year.
In addition, the travel cost deduction per kilometre when using a personal vehicle for work commutes will be increased from 0.25 euros to 0.30 euros.
According to the government, these changes will affect approximately 570,000 taxpayers.
Tax exemption for farms
Government measures are also being planned to provide professional transport operators and the agricultural sector with a cushion against higher energy prices.
The government intends to suspend the property tax on agricultural production buildings for 2022, provided that the measure does not conflict with EU legislation.
A loan guarantee model to support climate-friendly investments, and an “income and region-based, targeted support scheme” are being prepared for households.
The government is also recommending that increased housing costs due to rising energy prices be taken into account by officials when granting income supports.
Preparations for a professional diesel fuel tax arrangement will also begin to make “professional diesel”, taxed at a lower rate, available for purchase by professional drivers.
Lower tax revenues
According to Saarikko, these moves will not increase direct government spending, but will lower tax revenues.
The largest reduction already decided, estimated at 140 million euros, will come from the higher deduction for commuting costs.
Suspending property taxes on agricultural buildings will lower revenues by around 10 million euros.
If implemented as planned, provisions for professional diesel fuel will cut revenue to state coffers by 300 million euros.
According to the finance minister, more than 20 European countries have already decided to use various support measures to alleviate the impact of rising energy prices.
Energy prices boosted inflation in January
Higher electricity and fuel prices were the main factors in growing inflation in January, according to Statistics Finland. Finnish consumer prices last month rose by 4.4 percent year-on-year.
In December, inflation was pegged at 3.5 percent.
According to preliminary data, the rate of inflation in whole of the the euro area was 5.1 percent in January.
In addition to electricity and fuels, inflation in Finland was also accelerated by higher prices for home renovations.
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