HELSINKI (Reuters) – Finland’s government on Thursday proposed increasing capital gains tax and income tax on high earners to help pay for a 10-fold increase in refugees expected to arrive this year, its finance minister said.
The EU migrant crisis proposes a political as well as a financial challenge for the coalition, whose foreign minister, Timo Soini, heads the Eurosceptic party, The Finns, which campaigned for tighter controls on immigration.
Finance Minister Alexander Stubb said the highest bracket of capital gains tax would be raised by 1 percentage point while people earning more than 72,300 euros ($81,000) would be required to pay a so-called solidarity tax for two years, lowering the threshold from 90,000 euros.
“These will help to cover higher immigration costs which we estimate to be about 114 million euros this year,” Stubb told a news conference.
The centre-right coalition, which took office in May, is struggling to cut government spending quickly in a shrinking economy where unemployment is on the rise.
Finland last week doubled its estimate for the number of asylum seekers expected this year to up to 30,000, compared with just 3,600 last year.
The government agreed before the summer that any EU plan to apportion asylum seekers among EU states should be voluntary. Nevertheless, its interior minister, from the pro-EU National Coalition party, agreed in July to take about 800 refugees from among those who had arrived in Greece and Italy.
The government is due to decide on Friday on how to respond to a new EU quota proposal.
The tax proposals may also be aimed to counter accusations that the poor and middle class have been hit worst by government policies. The government also announced that members of parliament would be required to take a week’s unpaid holiday and all ministers would forgo a week’s pay.
Earlier this week it presented labor market reforms that included reductions in holidays, prompting a hostile reaction from trade unions who said it went against Finland’s traditional consensus politics.
Finland’s economy is shrinking for a fourth year in a row due to weak demand from European and Russian markets and problems affecting its main export industries, including technology.