Taxation 

Updated: 14.7.2016 - Next update: 16.3.2017
   
 
 
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Tax revenue grew by 2.2 per cent in 2015


The accrual of taxes and compulsory social security contributions grew by 2.2 per cent in 2015. The total accrual amounted to EUR 92 billion. The tax ratio grew from the previous year by 0.2 percentage points to 44.0 per cent. The tax ratio describes the ratio of taxes and compulsory social security contributions to gross domestic product. The tax ratio for 2015 went down by 0.5 percentage points mainly because GDP became revised from the preliminary data released in March. The data on the accrual of taxes did not become significantly revised from previously released data. These data are based on the revised national accounts data for 2015.

The revenue from income tax of corporations grew particularly. The revenue from income tax paid by corporations rose by 15.2 per cent and totalled EUR 4.4 billion. In addition, the accrual from households' income tax, employment pension contributions paid by employers and the insured, inheritance and gift tax and energy taxes, for example, grew in 2015. The accrual of excise duties on alcoholic beverages, in turn, contracted by 1.8 per cent, to EUR 1.4 billion. For example, duty on interests, excise duty on motor cars, and waste tax also decreased. EUR two million were recorded in the national accounts as tax revenue from the contributions to the Resolution Fund collected by the Financial Stability Authority in 2015 from credit institutions and investment firms. The share of the contribution covered by the bank tax collected in earlier years was not recorded as tax revenue.

In 2015, the tax revenue of the state totalled EUR 43.3 billion. The growth from the year before amounted to 1.5 per cent. The tax revenue of local government totalled EUR 21.9 billion and grew by 3.3 per cent from one year before. The accruals of compulsory social security contributions paid to social security funds increased by 2.4 per cent and totalled EUR 26.6 billion. The proportion of taxes and statutory social security contributions in consolidated total general government income was 80.1 per cent in 2015.

In 2015, the net tax ratio decreased to 17.6 per cent from 17.9 per cent in the year before. The net tax ratio is calculated by deducting the subsidies, and current and capital transfers paid by general government to households and enterprises from the tax ratio.

Source:
Statistics Finland / Taxes and tax-like payments


Description of indicator

Tax ratio describes the amount of compulsory taxes and other levies collected by general government during the year, expressed as a percentage of GDP for that year.

Total tax ratio is one of the commonest measures used in international comparisons of public sector sizes.

The development of general government finances and the balance between expenditure and revenue directly influence the level and need for taxation. A characteristic feature of the welfare state has been the wide range of public sector tasks and large public social expenditure, which has been reflected in Finland’s high taxation rate and taxation directed at many different sectors. A prerequisite for economic development and the balance of public finances, moreover, is to ensure sufficient employment to enable a sufficient level of tax revenue and thereby cover the funding of public income transfers.

The targeting of taxation also has significant spill-over effects on the operating conditions and competitiveness of the business sector and industry. The economic effects of the national tax system are particularly highlighted in today’s global market. In terms of the vitality of industry, the tax system must be sufficiently clear and predictable. The level of taxation should also be reasonable to ensure that practising business activity in Finland is profitable and competitive relative to international competitors.

Taxation is also reflected in the development of households’ purchasing power, and therefore in growth prospects for demand and trade. Tax policy can steer citizens’ consumption in a desired direction by taxing in a targeted way certain commodities with excise duties, for example. Moreover, the government can at the same time use tax solutions to encourage entrepreneurs to invest and to activate consumer demand when the economy is weak.