In Finland, Tax Day Is the Best Day
While American televisions and newspapers delved deep into the weeds in their coverage of this week’s midterms elections, Finland’s media turned their attention to their own national spectacle of civic duty and patriotism — taxes. Normally tax season is nothing to get excited about, but it’s an anticipated event for many Finns. On Monday the ...
While American televisions and newspapers delved deep into the weeds in their coverage of this week’s midterms elections, Finland’s media turned their attention to their own national spectacle of civic duty and patriotism — taxes.
Normally tax season is nothing to get excited about, but it’s an anticipated event for many Finns. On Monday the Finnish tax authorities made public the data of each person in the country, opening the door for a media frenzy of gossip, boasting, and fingerpointing about who has paid their fair share in income tax.
While some might abhor the lack of privacy, the Finnish government believes that making tax information public is necessary for keeping the country functioning. Finland’s welfare system, like America’s, is based off taxes, so public disclosures reinforce the idea that everyone should contribute. But apart from being an opportunity for Finnish society to have its yearly dose of schadenfreude, the country’s fixation on taxes highlights an internal political debate about sustaining Finland’s welfare model.
Dubbed an economic "supermodel" by the Economist in 2013, Finland has earned international accolades for its balance of business policies and generous social welfare programs. Foreign Policy ranked Finland as the world’s most stable state on its Fragile States Index, and Helsinki’s policies have garnered worldwide praise on issues ranging from government transparency to education. But without a way to keep the Nordic nation’s highest earners paying into the system, the social benefits that have made Finland the envy of many parts of the world would not be possible.
That’s why every November, Finland’s top papers clamour to dig through the data, tracking the rise and fall of the fortunes of politicians and businessmen, while Finnish tabloids capitalize on the public disclosures to peek into the lives of the country’s celebrities. In past years, investigative work based off the annual release of data has exposed tax-dodging cabinet ministers and sports stars with offshore tax havens.
But not all stories are so hard-hitting. This week, the top stories in the tabloid paper Iltalehti all aired the financial dirty laundry of Finland’s celebrities and politicians. For example, one story stated that Juha Sipilä, the chairman of the Center Party, saw his fortune dwindle to the point that he is now the country’s lowest earning member of the opposition. Another highly trafficked story gloated over the fact that popular Finnish rap star Cheek (a Nordic version of 50 Cent), actually netted less in 2013 than Matti Nykänen, a former Olympic ski jumper turned singer with a history of violence and alcohol abuse.
Apart from tabloid gossip, the frictions that the tax disclosures expose are very real. In the 1990s, the average income tax rate was 37.5 percent in Finland, but throughout the 2000s income taxes eased considerably to 30 percent. But since the eurozone crisis in 2009, tax rates have started to climb as Helsinki has grappled with trying to keep the welfare system funded while tightening its fiscal belt. The average tax rate is currently 30.4 percent, but is slated to rise to 31.1 percent next year. In March, the rising tax rate led Björn Wahlroos, a banker and one of Finland’s richest men, to move to Sweden, reportedly because of the more lenient tax regime.
Not all of Finland’s elite are fleeing from the rising taxes, though. Some see paying a high tax rate as a badge of patriotism. On Monday, the seven owners of the gaming company Supercell, best known for their bestseller Clash of Clans, saw themselves at the top of Finland’s income list, paying a combined 230 million euros ($287 million) in taxes. But instead of looking for tax havens abroad, Supercell touted itself as a true Finnish brand. "We’ve received a lot of help from society, and now it is our turn to pay back," Ilka Paananen, the company’s CEO, said in an interview with Finland’s Helsingin Sanomat newspaper.
Helsingin Sanomat estimated that the total revenue generated from Supercell owners in 2013 would be enough to cover the annual expenses for the prime minister’s office, or would be enough to fund Finland’s prison system for one year. Thanks to Paananen and his team, Finland’s welfare system looks safe — at least until the next tax season.
Reid Standish is an Alfa fellow and Foreign Policy’s special correspondent covering Russia and Eurasia. He was formerly an associate editor. Twitter: @reidstan