The Finnish government is preparing to abolish the tax deductibility of trade union membership fees, according to Helsingin Sanomat, citing unnamed sources. Governing coalition parties have reportedly reached a preliminary agreement on the matter.
Under the proposal, the same deduction would also be removed for employer organisation membership fees. If implemented, the reform would boost annual state tax revenues by an estimated 190 million euros.
Labour groups argue that eliminating the tax break could reduce workers' willingness to join unions.
Jarkko Eloranta, President of the Central Organisation of Finnish Trade Unions (SAK), condemned the government's plan.
"Once again, the government is targeting Finnish workers. In employee professions, wage increases are largely negotiated by trade unions. It is simply impossible for the government to compensate for real pay rises through income tax cuts. This year, wages in many SAK sectors are rising by 2.9 percent," Eloranta said in a statement.
He warned that scrapping the deduction could weaken union membership rates, which in turn would undermine unions' ability to negotiate pay rises and better working conditions.
"Throughout its term, the government has consistently attacked the labour market system and especially the trade union movement," Eloranta added.
Surprise for major stakeholders
The proposal also came as a surprise to some of the country's major labour and business groups.
Riku Aalto, Chair of the Industrial Union — one of Finland's largest trade unions with around 200,000 members—said the announcement was unexpected.
"This was yet another reason why the government is holding its midterm budget session after the [municipal and regional] elections," Aalto remarked.
Reports suggest that in parallel with scrapping the union deduction, companies would also lose the right to deduct payments to their own representative organisations.
The Finnish Federation of Enterprises (Suomen Yrittäjät) was also unaware of the plan.
"It shows just how difficult the public finance situation is when even these kinds of issues are being put on the table," said the organisation's CEO Mikael Pentikäinen.