Tax revenue falls 2.2% in 2020

The accrual of taxes and compulsory social security contributions decreased by 2.2 per cent in 2020 mainly due to reasons related to the corona pandemic, according to Statistics Finland.

The total accrual amounted to EUR 99.2 billion. The tax ratio fell from that of the previous year by 0.4 percentage points to 41.8 per cent.

In 2020, the net tax ratio was 15.4 per cent of gross domestic product, down by 2.8 percentage points from the previous year’s ratio. The coronavirus situation contributed to the decline in the net tax ratio, especially due to the growth in income transfers, but also to the decrease in the accruals of taxes and social security contributions.

The value-added tax revenue dropped 0.9 per cent year on year to EUR 21.8 billion.

In the accrual basis of the national accounts, value-added tax revenue also includes the 2020 taxes deferred to be paid during the next 1.4 years by means of payment arrangements made due to the pandemic.

The revenue from other taxes paid on goods and services decreased by 4.0 per cent, the most significant in terms of amount were the revenue from central government's share of Oy Veikkaus Ab’s profit, which decreased by 32.1 per cent and amounted to EUR 746 million, motor vehicle and motorcycle tax, whose revenue decreased year on year by 19.5 per cent to EUR 713 million.

Similarly to revenue from central government's share of Oy Veikkaus Ab’s profit, the revenue from lottery tax fell considerably (by 23.1 per cent) and its revenue was EUR 170 million. The revenue from energy taxes decreased by 1.0 per cent and the revenue for the year was EUR 4.3 billion.

The revenues grew mainly concerning tax on soft drinks (16.1 per cent), pharmacy fee (5.3 per cent), insurance premium tax (3.9 per cent), tobacco tax (3.4 per cent), alcohol tax (2.6 per cent), and vehicle tax (1.6 per cent). Of these, the biggest revenues were EUR 1.5 billion in alcohol tax, EUR 1.2 billion in vehicle tax, and EUR 1.1 billion in tobacco tax.

The revenue from income tax paid by households grew by 1.6 per cent from that in the previous year and amounted to EUR 29.8 billion.

A significant contributor to the decrease in tax revenue was corporations’ income tax, the revenue from which (EUR 4.8 billion) decreased by 20.3 per cent from that in the year before. The revenue from taxes on property grew by 2.8 per cent. In 2020, the revenue from inheritance and gift tax was EUR 797 million or 6.4 per cent higher than that in 2019. The revenue from asset transfer tax was EUR 822 million, declining 4.1 per cent year on year.

EUR 235 million collected as contributions to the Single Resolution Fund from credit institutions was recorded as tax revenue for the institutions of the European Union. Customs duties accounted to the EU amounted to EUR 174 million.

In 2020, the tax revenue of central government totalled EUR 46.9 billion, which was 5.4 per cent lower than that in the year before. The tax revenue of local government grew by 5.7 per cent and was EUR 24.5 billion. Most of the tax revenue of local government comes from households’ income taxes.

The revenue of compulsory social security contributions of social security funds contracted by 3.3 per cent and the contributions totalled EUR 27.4 billion. The proportion of taxes and statutory social security contributions in consolidated total general government income was 81.1 per cent in 2020.