The Petteri Orpo-led government published its 2025 draft budget proposal after a round of negotiations on Tuesday. Here are the key decisions in the proposal that could impact daily life in Finland.
1. Increased VAT on everyday items
Products currently taxed at the reduced VAT rate of 10 percent will be moved to the 14 percent rate. This includes medicines, sports services, admission fees, accommodation services, taxis, buses, and domestic flights. VAT on sweets will increase from 14 to 25.5 percent.
VAT on hygiene products such as menstrual items and nappies, however, will be reduced to 14 percent.
2. More police funding
The draft proposal includes an additional 17.5 million euros for the police. The number of officers will be increased to a total of 8,000 by the end of the term.
A total of seven million euros is allocated to combat youth and gang crime, which includes an additional five million euros beyond an initial two million-euro boost.
3. More for Nato
Finland is adding 67 million euros to its Nato contribution. The funds will help set up a Nato command structure in Finland and allow Forward Land Forces (FLF) to be stationed as part of the defence alliance's eastern flank.
4. Increased defence funding
Next year, the defence budget will rise to nearly 6.5 billion euros, up by almost 500 million euros from last year's budget.
The largest increase is allocated for purchasing fighter jets, at a total of 251 million euros. Additionally, funding will support increasing Defence Forces personnel by about 140 members.
5. Care time adjustments
The government plans to change policies regarding a patient's guaranteed time of receiving care, a move it said would save an estimated 121 million euros.
There will also be fewer caregivers providing round-the-clock care for the elderly. Going forward, there will be six caregivers for every 10 clients, down from the previous ratio of 6.5 healthcare workers. Patient fees are also set to rise, leading to a 150 million euro reduction in state funding for healthcare.
6. Cuts to sick leave benefits and prescription subsidies
Aiming for a savings of 60 million euros, the government also plans to reduce sick leave benefits. Additionally, savings of 59.6 million euros are expected from cuts to prescription subsidies.
7. Cuts to housing benefits
Housing support for pensioners will be cut by 6.3 million euros, while general housing benefits will see a reduction of about 7.5 million euros. Moving student housing support into study grants will save the state approximately 20 million euros.
The government also plans to stop paying national pension top-ups to Finnish citizens living abroad, resulting in savings of about 35 million euros.
8. Big cuts to vocational programmes
Funding for vocational education will be reduced by 120 million euros, including a 63 million euro cut in state funding. However, the government has made assurances the cuts will not affect basic vocational training for young people.
Starting in 2026, the government has proposed an additional 3.8 million euros to increase higher education enrolment slots.
9. Boosts for energy, business
The government will provide capital to state-owned utility operators Fingrid and Gasgrid to support significant energy network investments across Finland.
Research and development funding will increase by 280 million euros compared to 2024.
Funding authority for Business Finland will rise by 94 million euros, and Finnish Industry Investment (Tesi) will receive 100 million euros in capital next year and 300 million euros over the entire term.
10. More for transportation
Additional funds are proposed for various transportation projects, including 11 million euros for Highway 5 (Leppävirta–Kuopio). The development of the Coastal Railway (between Helsinki and Turku) is set to receive a 50 million euro adjustment and 17 million euros in funding.
The Highway 12 Mankala–Tillola project will receive 92 million euros in authorisation and one million in funding, while the Karelian Railway will be allocated 90 million euros in authorisation and 10.5 million euros in funding.
11. Environmental funding
The government is implementing a new flexibility mechanism for fuel distribution obligations. According to the government, this will allow fuel distributors like Neste and Gasum to meet environmental obligations by funding other emission reduction efforts. The arrangement will also impact how much consumers pay for fuel.
The government is also planning to fund an extra 1.8 million euros for voluntary nature conservation and privately funded ecological restoration efforts, with a focus on protecting old-growth forests.
12. Hours added to basic education
The minimum number of hours for basic education will increase by three hours per week, focusing on more Finnish language and mathematics without expanding the curriculum.
A new development program for early childhood education staff will be launched with a budget of 6 million euros. Additionally, 10 million euros will be allocated to support continuous learning.
13. Supporting troubled youth
The government proposes 6.5 million euros to support young people dealing with substance abuse and violence, prevent drug-related deaths, and improve child protection services.
In addition, 2.5 million euros is proposed for low-threshold mental health services, such as online chat and telephone support. Funding for shelters will also be increased.
14. Cuts to development aid, asylum system
Development aid will face a significant reduction of 135 million euros.
In addition, 15.7 million euros will be cut from the asylum and international protection system, while reception centre grants will be reduced by 9.2 million euros.
Savings will also be made in interpretation and integration programmes. However, the government plans to increase funding to improve the situation of mothers with immigrant backgrounds.
15. Increased funding for municipalities
Municipalities will receive an additional 900 million euros compared to the 2024 budget, totalling 3.4 billion euros. This includes a permanent increase of 277 million euros to mitigate the financial impact of the social and healthcare reform. Employment and Economic (TE) services will be transferred to municipalities starting January 2025.
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