Tax revenues drop for 1st time since 2008 financial crisis

Hit hard by the COVID-19 pandemic, Finland's tax revenues have decreased for the first time since the 2008 financial crisis, reported Xinhua, quoting Finnish Tax Administration on Friday.

According to the Tax Administration, by the end of August this year, Finland's state tax revenue was 1.9 billion euros lower than one year earlier.

In recent years, tax revenues have increased by at least half a billion euros compared to the preceding year.

Last year, the Ministry of Finance projected tax revenues to grow as usual in 2020. However, Veliarvo Tamminen, economic advisor at the ministry, told national broadcaster Yle that "when the reality of the (COVID-19) situation began to dawn... first in late winter and then in early spring, we forecasted that tax income would not increase this year."

Tamminen pointed out that setbacks are still possible and people in Finland might change their consumption behavior, even if no new restrictions are introduced. "If the epidemic worsens, consumers may react by reducing consumption in stores and restaurants."

According to Tamminen, this year's corporate tax income is expected to be 800 million euros less than in the same period of 2019. Therefore, greater spending and lower incomes will generate a shortfall that will be filled by some 17.8 billion euros in debt.

Finland's government debt surpassed the 100-billion-euro threshold for the first time at the beginning of this year, according to Yle. In mid-September, when the government unveiled a spending package for 2021, total government debt was estimated to increase to 135 billion euros next year.