Finland's leading fiscal conservative

Some would nominate Sauli Niinistö of the National Coalition Party, but State Secretary Raimo Sailas, the Finnish Ministry of Finance's answer to Sir Humphrey, gives him a run for his (no doubt prudently spent) money. Yesterday negotiators from the government-bound parties were made to listen to warnings from Sailas and Erkki Liikanen, Chairman of the Board of the Bank of Finland. The counterintuitive thing is that both Sailas and Liikanen are Social Democrats. There mustn't be very many countries where two leading figures from a big centre-left opposition party are carted in to explain to centre-right government party leaders that they must remember to balance the books.

Sailas is most famous, infamous even, for the Sailas Paper. The Sailas Paper is a mythical scroll that can tell those brave souls who dare to gaze upon it everything there is to know about the state of Finland's finances, from the beginning of time to the day the sun grows cold and dim. Rumor has it that going against the sage advice contained therein will lead to surefire financial ruin, breakdown of societal order, and dogs and cats living together in abject poverty. To put in less flowery terms, when Sailas makes recommendations, politicians listen.

This time around Sailas recommended that the inheritance tax not be cut too much. I tend to agree with him. The proposals to reduce or eliminate the tax in certain targeted cases, so that heirs don't have to sell small family businesses or houses in which they already live, make sense to me. The Coalition apparently wants to cut it entirely, which, I fear, would hurt the degree of social mobility we currently see in Finland. The Coalition's appeal to fairness, based on the claim that inheritances have already been taxed once, is nonsensical; sentimentality aside, the dead person paid the taxes, not the heir.

1 comment:

Aapo said...

Erkki "Recessionbringer" Liikanen giving such warnings is of course a mere joke, but Mr Sailas is a guy whose views I tend to respect.

It of course hurts politicians, and most voters too, to hear that politics ain't what it used to be in the good old times - a supreme instrument to share wealth and goodies, and to reward your favourite interest groups - but has instead become a nasty trade-off game, where you even may have to let something go, but that's just the way it goes. There's no money.

If you want more services, you must pay more taxes, and if you want to pay less taxes, you must give up some services. If you try to cut taxes and keep the same provision of public services, it'll be the next generation that will have to pick up the tab. It's that simple. I find it truly dispiriting that it's civil servants, and not democratically elected leaders, who are daring to say these things aloud. There are decisions and there are reforms, but there's no social contract behind them.

The death tax discussion, then, is a good example of how things have developed in our welfare state. The middle class has the power, so the middle class naturally gets all privileges that the power grants. Now the middle class has discovered that what used to be a tax for the rich also damages the middle class interests, so it has naturally decided to get rid of it. Too bad for the socdems that they figured it out too late.