In an effort to curb the rising cost of living, the government is looking to tax reductions to keep more euros in people's pockets. Prime Minister Matti Vanhanen is now promising to cut income taxes more than originally planned. In an interview with Turun Sanomat and the Väli-Suomen Media Group Vanhanen says tax relief schemes for the next two years must be carefully mapped out this summer. Vanhanen has shot down proposals from the Social Democrats as well as from the National Coalition that the parties say would help control inflation. The SDP wants to abolish day care fees, but Vanhanen says such a move is dangerous since it can lead to pressure to lift other municipal service fees. The premier says the main challenge at the moment is stretching current funds to cover public service costs. The National Coalition meanwhile suggests using all tax rebates in the coming year, rather than spreading them out over a longer period. Purchasing power in Finland is deteriorating faster than in most other European countries. Pay increases recently achieved through difficult labour actions are of little consolation now. Inflation hit 4.4 percent last month, a level last seen in the recession of the early 1990s. Inflation in Finland Reaches 17-Year Peak
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