Government to raise taxes on alcohol, tobacco and heating fuels

It's official, the government intends to increase the excise taxes on alcohol, tobacco and heating fuels next year. 

Finance Minister Matti Vanhanen confirmed this on Wednesday during the presentation of his budget proposal for 2021. The proposal, which will be published in full on Thursday, has been drafted under the idea that next year countries will be able to control the coronavirus pandemic. An assumption that is not clear if it can be carried out.

Overall, the Ministry of Finance proposes appropriations of 61.6 billion euros in the draft budget. That is 3.9 billion euros more than in the current 2020 budget, but 5.7 billion euros less than budgeted for 2020, including amending budgets.

The proposal foresees a budgetary deficit of 7 billion euros. The expected deficit for 2020, including amending budgets, is 18.9 billion euros.

Public debt - a macroeconomic evil that terrifies the Finns - will rise to about 132 billion euros.

The budget proposal foresees state revenue for 2021 estimated at 54.6 billion euros, of which 46.5 billion euros are tax revenue.

Tax increases

In order to achieve this level of tax revenue, the Government plans to apply several tax increases. They will be added to the sharp increase in gasoline and diesel taxes that the government applied in August.

Taxes on tobacco and alcohol will go up to raise an additional 50 million euros each, as previously decided.

Tax revenue from heating fuels will also increase by 100 million euros by reducing the tax subsidy for combined heat and power generation and increasing taxes on heating fuels.

From the beginning of next year, the industrial electricity tax will be reduced to the EU minimum level. This change will reduce tax revenues by approximately 245 million euros annually, according to the proposal.

22 million euros will be allocated to increase the compulsory school age to 18 years of age.