Industrial Union: Tax solutions of the Government’s mid-term talks on spending limits reward high earners and businesses at the expense of workers

The Industrial Union strongly criticises the tax decisions taken by Petteri Orpo’s Government at the mid-term policy review session. The Government is using the tight public spending budget in ways that increase income inequality and national debt. These include tax cuts of more than EUR 300 million for high earners and around EUR 1 billion in corporation tax, but the relief for workers will be offset by the impact of other decisions.

‘Handing out hundreds of millions in tax cuts to high earners and billions in tax cuts to businesses while claiming that this benefits everyone is downright irresponsible. This is not what growth policy looks like. This is the biggest robbery of the nation’s coffers in the history of our welfare state,’ says Riku Aalto, Chair of the Industrial Union.

The Industrial Union points out that, for well over a decade, Finland has been trying to grow the economy by easing the tax and contribution burden on companies. The abolishment of Kela contributions, several cuts to corporation tax and the beneficial effects of the Competitiveness Pact on employers have not led to economic reform or significant growth. Yet the current Government keeps carrying on along the same lines, even though there is no evidence of success.

‘Once again, it is ordinary Finnish workers who will pay the price for the intense lobbying by businesses and whose safety nets and services are being cut in order to finance this spending spree. The Government’s tax decisions that benefit high earners and businesses can be summed up in three words: irresponsible, unfair and delusional,’ Aalto continues.

Purchasing power of low and middle-income earners unlikely to increase

The Industrial Union also strongly criticises the Government for claiming that its decisions will significantly increase the purchasing power of low and middle-income earners. This is far from the truth. As much as the Government is promising tax cuts for workers, its other measures are nullifying their impact. The Union points out that the Government has cut earnings-related unemployment benefits, weakened workers’ rights, made it more difficult to negotiate pay rises and, most recently, announced that it will abolish the tax deductibility of trade union membership subscriptions.

‘The Government is giving tax cuts with one hand but taking away wages, workers’ rights and income-related unemployment benefits with the other. This results in a negative sum total. If the Government genuinely wanted to increase the purchasing power of workers, it would seek to ensure the operating conditions of workers’ unions instead of constantly chipping away at workers’ rights,’ Aalto says.

Abolition of tax deductibility threatens universality and the hard-fought three years of industrial peace

The Industrial Union considers the Government’s decision to abolish the tax deductibility of trade union membership subscriptions especially problematic. At the same time, the Government is also attacking the tax deductibility of employers’ associations’ membership fees. The decision undermines the universality of collective agreements by weakening incentives to participate in organised labour markets. It also threatens the continuation of collective agreements until the end of the three-year contract term.

‘The scrapping of universality puts the terms of employment of tens of thousands of workers at risk. The Government’s ideological hatred of the trade union movement makes it impossible to defend workers’ interests and rights effectively.’

‘The decision to abolish the tax deductibility of membership subscriptions will inevitably also have an impact on the length of existing collective agreements. The Industrial Union will be forced to re-evaluate whether it can still commit to three years of industrial peace in these circumstances. The abolition of tax deductibility also affects collective agreements in a wider sense,’ Aalto says.

The Industrial Union considers it clear that employers’ associations will find ways to circumvent the Government’s decision to abolish the tax exemption. The Union believes that, in reality, the abolition of tax deductibility will ultimately only affect the workers’ side.

‘So far, the Government has implemented all its measures in such a way that they only weaken the position of workers. I am fully expecting the Government to build a back door that will allow the employers’ side to escape the effects of this change as well. This Government is systematically doing everything that businesses want it to do,’ Aalto concludes.

Additional information:

Riku Aalto
+358 (0)40 071 1072

Response of the Board of the Industrial Union to the Government’s mid-term policy review session – The Union’s Board convened in Hakaniemi on Thursday, 24 April 2025