{"id":42135,"date":"2024-04-17T16:22:00","date_gmt":"2024-04-17T13:22:00","guid":{"rendered":"https:\/\/www.ekonomit.fi\/?p=42135"},"modified":"2024-05-03T12:26:54","modified_gmt":"2024-05-03T09:26:54","slug":"why-are-business-subsidies-protected-but-students-allowances-cut","status":"publish","type":"post","link":"https:\/\/www.ekonomit.fi\/en\/press-release\/why-are-business-subsidies-protected-but-students-allowances-cut\/","title":{"rendered":"Why are business subsidies protected but student\u2019s allowances cut? Suomen Ekonomit criticizes the additional taxation of work and praises the investments in R&amp;D"},"content":{"rendered":"\n<p>According to Suomen Ekonomit&#8217;s chief economist <strong>Elias Er\u00e4maja<\/strong>, the budget decisions to safeguard the public finances are appropriately calibrated, as well as the balance between tax increases and cuts in spendings. The overall tax burden will not increase under this new budget framework, and the taxation focus will shift towards consumption and harmful activities. However, reaching the needed three billion euros adjustment target could have been achieved by other means.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>It is particularly hard to justify an increase in taxes on earned income, as Finland&#8217;s tax progression is already among the world&#8217;s highest. Instead, the aim should be to ensure that no taxpayer&#8217;s marginal tax rate exceeds 50 percent. This measure -that looks like a solidarity tax- could have been avoided by collecting the same amount -60 million euros- from increased taxes on, for instance, tobacco and alcohol. The rates on these products have been raised, but surprisingly moderately, Er\u00e4maja states.<\/p>\n<\/blockquote>\n\n\n\n<p>According to Er\u00e4maja, business subsidies have been unjustifiably spared in this budget framework. If business subsidies had been cut by around 300 million euros, then the standard rate of the value-added tax could have been lifted by only one point of percent.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>Many business subsidies are ineffective or even harmful to the long-term development of productivity and economic growth. Amidst such massive budget adjustment measures and tax increases, it would have been fit to prune business subsidies as well. This way, such a surge of the value-added tax could have been avoided, concludes Er\u00e4maja.<\/p>\n<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\">Students&#8217; wallets getting concerningly lighter<\/h2>\n\n\n\n<p>The horizon has darkened for students as Orpo&#8217;s government has decided to shift the students\u2019 housing support from the general housing support scheme to only the housing financial aid supplement for students. According to <strong>Lotta Leinonen<\/strong>, Suomen Ekonomit\u2019s education policy specialist, this decision makes the already tight financial situation of students worse, pushing young people into more debt. In the worst cases, these cuts to student allowances can amount to thousands of euros per year for a student.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>Concerns about the already weak financial situation of students had surely already reached the ears of the ministers. The decision to further weaken the situation is shaking young people&#8217;s belief in the future. Previous cuts to student allowances have resulted in decreased time spent on studying and increased mental health challenges, Leinonen reminds.<\/p>\n<\/blockquote>\n\n\n\n<p>Good news on the other hand for investments in research and development activities, as Orpo&#8217;s government maintained their funding amid a tight economic situation. The government also stuck with its promise to invest into primary education.<\/p>\n\n\n\n<p>However, strengthening the funding of higher education would have been a good add-on to the government\u2019s growth-oriented measures. In that respect, solutions to the skills shortage were lacking.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>The government decided on numerous growth-oriented measures, but higher education was not on the list. If more resources are not allocated to higher education, it won\u2019t be possible to fix the skills shortage nor to raise the level of education -which are objectives of the current government- especially when at the same time students&#8217; allowances are being cut, Leinonen argues.<\/p>\n<\/blockquote>\n\n\n\n<h3 class=\"wp-block-heading\">More questions?<\/h3>\n\n\n\t<div class=\"wp-block-cdl-person-block\">\n\t\t<div class=\"image\">\n\t\t\t<img decoding=\"async\" src=\"https:\/\/www.ekonomit.fi\/wp-content\/uploads\/2023\/03\/elias-eramaja.jpg\">\n\t\t<\/div>\n\t\t<div class=\"info\">\n\t\t\t<div class=\"name\">\n\t\t\t\tEr\u00e4maja\t\t\t\tElias\t\t\t<\/div>\n\t\t\t<div class=\"job-title\">Chief Economist<\/div>\n\t\t\t<div class=\"phone\">p. +358407471854<\/div>\n\t\t\t\t\t\t\t\t\t<div class=\"description\"><\/div>\n\t\t<\/div>\n\t<\/div>\n\t\n\n\t<div class=\"wp-block-cdl-person-block\">\n\t\t<div class=\"image\">\n\t\t\t<img decoding=\"async\" src=\"https:\/\/www.ekonomit.fi\/wp-content\/uploads\/2024\/01\/Lotta-Leinonen.png\">\n\t\t<\/div>\n\t\t<div class=\"info\">\n\t\t\t<div class=\"name\">\n\t\t\t\tPennala\t\t\t\tLotta\t\t\t<\/div>\n\t\t\t<div class=\"job-title\">Special Adviser, Education Policy<\/div>\n\t\t\t<div class=\"phone\">p. +358440660384<\/div>\n\t\t\t\t\t\t\t\t\t<div class=\"description\"><\/div>\n\t\t<\/div>\n\t<\/div>\n\t<div class=\"rns\" data-title=\"Why are business subsidies protected but student\u2019s allowances cut? Suomen Ekonomit criticizes the additional taxation of work and praises the investments in R&amp;D\" data-tags=\"\" data-categories=\"Press release\" data-comments=\"0\" data-date=\"1713370920000\" data-author=\"heidihaapalainen\" data-single=\"\" data-url=\"https:\/\/www.ekonomit.fi\/en\/press-release\/why-are-business-subsidies-protected-but-students-allowances-cut\/\"><\/div> <!-- Check out https:\/\/reactandshare.com -->","protected":false},"excerpt":{"rendered":"<p>The new government\u2019 budget framework -kehysriihi- is aiming in the right direction, though business subsidies keep being unjustifiably protected. The government also backtracked on its earlier announcements by tightening labor taxation. The set target of increasing the level of education will only remain a dream with such budgeting decisions: the funding of higher education institutions was excluded from the growth-oriented budget measures and cuts were made to students&#8217; allowances.<\/p>\n","protected":false},"author":3,"featured_media":38574,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"advgb_blocks_editor_width":"","advgb_blocks_columns_visual_guide":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[121],"tags":[],"class_list":["post-42135","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-press-release"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Why are business subsidies protected but student\u2019s allowances cut? 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The government also backtracked on its earlier announcements by tightening labor taxation. The set target of increasing the level of education will only remain a dream with such budgeting decisions: the funding of higher education institutions was excluded from the growth-oriented budget measures and cuts were made to students&#039; allowances.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.ekonomit.fi\/en\/press-release\/why-are-business-subsidies-protected-but-students-allowances-cut\/\" \/>\n<meta property=\"og:site_name\" content=\"Suomen Ekonomit\" \/>\n<meta property=\"article:published_time\" content=\"2024-04-17T13:22:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-05-03T09:26:54+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.ekonomit.fi\/wp-content\/uploads\/2023\/09\/3-1-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"2560\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"heidihaapalainen\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"heidihaapalainen\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.ekonomit.fi\\\/en\\\/press-release\\\/why-are-business-subsidies-protected-but-students-allowances-cut\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.ekonomit.fi\\\/en\\\/press-release\\\/why-are-business-subsidies-protected-but-students-allowances-cut\\\/\"},\"author\":{\"name\":\"heidihaapalainen\",\"@id\":\"https:\\\/\\\/www.ekonomit.fi\\\/en\\\/#\\\/schema\\\/person\\\/1fbd84fd17a8f0f947f8beab7b23949b\"},\"headline\":\"Why are business subsidies protected but student\u2019s allowances cut? 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