Retroactively to last April until the end of 2009, small-scale timber sales will enjoy a 50 percent cut in sales tax, and 25 percent in 2010. Prime Minister Matti Vanhanen and Finance Minister Jyrki Katainen made the announcement on Wednesday morning.
The tax break is significantly larger than the government had suggested in advance. The tax relief will cost the state 170 million euros annually.
Finnish sawmills and paper and pulp companies are feeling the pinch of higher tariffs that Russia plans to impose on its wood exports. The tariffs are expected to shoot to 50 euros per cubic metre next year, a move that will significantly dry up wood supply in Finland. The government hopes the tax breaks on selective timber sales will entice small-scale forest owners to put their trees on the market.
The European Commission has approved the tax relief plan. EU regulations cap the benefits to be reaped from the tax break at 200,000 euros over three years.