Government’s 2020 budget proposal for Ministry of Finance administrative sector
The Government proposes a total of EUR 18,493 million in appropriations for the Ministry of Finance administrative sector. This represents an increase of EUR 999 million compared with the figure in the approved 2019 Budget.
The proportion of these 2020 appropriations paid as discretionary government transfers to local government is 51%, while pensions and compensation paid by central government comprise 28%, EU payments 12%, energy tax subsidies 1.4% and transfers to Åland 1.5%. Of the appropriations under the main expenditure title, the operating expenses and consumption expenditure of government agencies account for 6%.
Central government transfers to local government
The Government proposes to allocate a total of EUR 7,074 million for central government transfers to local government for basic public services, which represents a reduction of EUR 1,417 million from the amount in the 2019 Budget. This reduction is due to the transfer to a separate budget item of EUR 1,967 million from the item ‘central government transfers to local government for basic public services’ as compensation to municipalities for tax revenue losses paid during 2010–2019. If this compensation is disregarded, central government transfers for basic services will rise from the approved 2019 budget to the 2020 budget by approximately EUR 550 million. The increase is at least partly due to revision of the cost allocation, which will increase central government transfers by EUR 102 million, a statutory index adjustment of EUR 166 million and a reduction of EUR 264 million in central government transfers related to the Competitiveness Pact.
In order to avoid having to duplicate the effect of the holiday bonus cut under the Competitiveness Pact, a one-off compensation of EUR 237 million to be paid to municipalities was brought forward for 2019. It will be paid to municipalities in the third supplementary budget for 2019.
Local government spending and central government transfers to local government will be reduced by, for example, the regional concentration of specialised medical care and savings due to changes in informal and family care. Conversely, more funds will be allocated to an earlier start to A1 language studies at school, extension of aftercare services in child welfare and correction of the government transfer for remote location due to calculation errors. In accordance with the Government Programme, restriction of the subjective right to early childhood education will be revoked and group sizes will be reduced, the Vaasa Central Hospital will be endowed with extensive emergency care services, and funds will be allocated to supporting the diversity of families and life paths.
In 2020, the reduction in municipal tax revenue will be offset by a sum of EUR 285 million in central government compensation.
Central government pension expenditure and compensation
The Government proposes a total of EUR 5,175 million for pensions and compensation paid by central government. This figure represents a EUR 107 million increase on the approved 2019 Budget figure. The increase is principally due to volume growth in and index adjustments to pensions.
Based on forecasts of expenditure on compensation, accident compensation payments are expected to decrease by EUR 5 million.
Contributions to the European Union
The Government proposes a total of EUR 2,206 million for the payment of Finland’s contributions to the European Union based on value-added tax base and gross national income. This figure represents a EUR 137 million increase on the 2019 Budget. The traditional own resources collected by Finland on behalf of the EU, i.e. customs duties and sugar levies, are not included in Finland's Budget.
Taxation and customs
The Government proposes to allocate a total of EUR 593 million for the operating expenses of the Finnish Tax Administration and Customs. This includes EUR 12 million in operating expenses for the National Incomes Register. In addition, EUR 29 million in variable annual appropriations is proposed for interest costs associated with taxes and tax rebates.
Statistical services, economic research and register management
The Government proposes to allocate a total of EUR 111 million for statistical services, government economic research and register management. Of this sum, EUR 54 million is proposed for the operating expenses of the new Digital and Population Data Services Agency, EUR 48 million for the operating expenses of Statistics Finland and EUR 4 million for the operating expenses of the VATT Institute for Economic Research.
Regional and local state administration
The local register offices and the Population Register Centre will merge into a new Digital and Population Data Services Agency. As a consequence of this merger, the operating expenses of the local register offices will be transferred to the registry administration. The Government proposes to allocate EUR 57 million in regional and local government appropriations. These are destined almost exclusively to cover the operating expenses of the Regional State Administrative Agencies.
Services for central government
The Government proposes to allocate a total of EUR 37 million for services provided to central government. This sum covers the operating expenses of the State Treasury, the Finnish Government Shared Services Centre for Finance and HR, and the Government ICT Centre. The maximum investment authorisation proposed for Senate Properties is EUR 325 million, an increase of EUR 85 million on 2019 for basic renovation and renovation expenditure, and for investments that increase the efficiency of premises. Most of the services for central government will be financed with fees charged on a cost price basis. The State Treasury also provides centralised services for central government in areas such as debt management and consolidated accounting.
All budget material on the Government website (in Finnish)
Jan Holmberg, Financial Manager, tel. +358 2955 30156, jan.holmberg(at)vm.fi