Finland’s tax revenues have increased from a year earlier despite cuts to taxation on earned income.
According to Finnish Tax Administration data, personal income tax receipts have risen by 3.4 per cent, or EUR 999 million, from the corresponding period last year. Value-added tax revenue is up by EUR 829 million, or 4.9 per cent, while corporate income tax receipts have increased by EUR 829 million, or 9.8 per cent.
The Finnish government also raised its full-year tax revenue estimate by EUR 1.058 billion in its third supplementary budget proposal. The Ministry of Finance said the revision was based on its September economic forecast and the latest revenue data.
Sami Pakarinen, an economist and director at the Confederation of Finnish Industries EK, sees the figures as evidence in favour of continuing to reduce taxation.
“Lower taxation does not weaken the welfare state but instead appears to strengthen it. Just as happened in Sweden,” Pakarinen wrote on X.
He argues that further tax cuts could strengthen public finances by increasing economic activity and growth over the longer term.
Pakarinen has repeatedly pointed to Sweden as an example of a country that has sought to make taxation more favourable to investment, ownership and capital formation. He says Finland’s tax debate too often concentrates on redistribution and the immediate, static effect of tax changes rather than their potential impact on economic behaviour and growth.
The latest revenue figures alone do not establish that tax cuts caused the increase in receipts. Tax revenues are also affected by employment, wages, corporate profits, consumption, inflation and changes elsewhere in the tax system.
Taxation becoming a political dividing line
The debate reflects a broader disagreement in Finland over how to repair the public finances while reviving economic growth.
Prime Minister Petteri Orpo’s centre-right National Coalition Party has made lower taxation of work and entrepreneurship a central part of its economic programme. It argues that Finland should rely primarily on spending restraint, stronger employment and growth rather than repeated tax increases.
The party’s current programme calls for lower overall taxation and further cuts to taxes on earned income.
The Orpo government reduced taxation on work by around EUR 1 billion in 2026. The measures included a larger tax credit for employment income and a reduction in the highest marginal income tax rate to around 52 per cent.
At the same time, the government broadened the tax base by removing some deductions and exemptions, meaning the policy package was not simply an across-the-board reduction in taxation.
National Coalition Party politicians have recently criticised proposals from parties on the left for higher taxes on income and wealth. MP Susanne Päivärinta, for example, has argued that such measures would weaken purchasing power and drive capital out of Finland, while the Left Alliance has advocated a so-called millionaire tax.
The Finnish Commerce Federation has separately warned against new tax increases that would reduce household purchasing power. It says the recovery in retail sales and employment remains fragile and could be undermined by higher consumption or income taxes.
Pakarinen’s argument is that Finland should instead focus on the longer-term effects of taxation on investment, work and economic dynamism.
“In Finland, the focus in taxation so easily remains on redistribution and a static, short-term view,” he said.
“Instead, the focus should be on growth, dynamism and the long term. In the Swedish way.”