📋 Tender Overview
The working group that examined the negative income tax does not recommend the introduction or experimentation of income support. The task of an expert working group set up by Minister of Finance Annika Saarikko has been to find out the introduction of a negative income tax in the Finnish tax system. The working group reviewed and evaluated the income support paid as a negative income tax in connection with the current income reduction as well as the conditions for conducting an experiment on income support. Income support would mean that income tax could be negative for people on low wages. The aim of income support would be to encourage employment in for example part-time and gig work. Income support could be implemented in tax legislation in the context of the current income deduction. The implementation of income support in the tax administrations information systems would be possible but would require fundamental changes to the system. Income support could not be deducted from other taxes within the tax system but should be provided for in the state budget. There would be no legal obstacles to carrying out an experiment with income support but several years should be set aside for its preparation and implementation. According to the working groups impact assessments income support would do little to improve incentives for the unemployed to work and would not be an effective way to improve employment. The Working Party notes that it would not be justified to introduce aid to be built into the tax system which would require a major overhaul of the tax system but which could not be considered to be effective in meeting its objectives.The implementation of a negative income tax in addition to social security is problematicThe working group also looked at a broader negative income tax that complements social security. The examination was carried out in particular from the point of view of the specific features of the implementation of social security in the tax system.The implementation of a negative income tax such as basic income in addition to social security as part of the current progressive taxation based on annual income would involve significant problems. Under the current tax system it would not be possible to ensure that the benefit is at least equal to the basic security on a monthly basis. In addition the benefit may be different at the same income level due to other factors affecting the amount of taxes.
