Finnish Welfare SystemExplained

What is welfare for Finns?● People work to pay taxes to the municipalities and

the government, who with those maintain services● As citizens pay taxes, they have access to use the

services including○ Healthcare○ Basic education○ Social services

● Health care is provided for citizens throughout their whole lives

● For adults health care is mostly free but they have to pay small fees

The social security system

● Finland has good social security system which is managed by Kela

● Social services provide help for everyday life in many ways. They provide assistance and help for various situations

● Kela handles social security services and benefits, such as ○ the national pension, child benefit, basic

unemployment benefit, sickness and parenthood allowance, and rehabilitation

● Every citizen receives a Kela-card

The history of Finland’s welfare system● After becoming independent, Finland’s GDP was one of the lowest in the world● Since then its growth has been very fast and the improvements in citizens’ lives

have been huge● Nowadays Finland has one of the most advanced and the most comprehensive

welfare systems but the situation wasn’t the same hundred years ago

Taxation in FinlandExplained

Basic information about taxation in Finland

● Who have power to levy taxes?○ The State○ The Municipalities○ The Evangelic Lutheran Church ○ the Orthodox Church

● Direct taxes include state income tax, capital tax, inheritance and gift tax, and asset transfer tax, all payable to the State

In Finland almost all income is taxed, as well as goods and services

Income-based tax rateWhen calculating your taxable income, take into account:

● tax allowances available if you are a Finnish resident

● possible deductions for certain types of expenditure

Also here is to pay: Church tax: 1 — 2%, Municipal income tax: 16.5 — 22.5% (depending on the municipality)

Taxable earned income (€)

Tax on income above the lowest tax bracket (%)

16 500—24 700 6.5

24 700—40 300 17.5

40 300—71 400 21.5

71 400—90 000 29.75

90 000- 31.75

Value Added Tax● VAT is a consumption tax that the seller

of goods or services will add to the price.

● The seller thus collects this tax from customers to remit it to the state.

● Liability to pay VAT concerns anyone who sells goods and services, rents out goods, or is engaged in similar commercial operations on an ongoing basis.

Commodities under heavy and low taxesLow taxes

● Paid from products which benefit citizens○ food○ medicine○ cultural activities

High taxes

● Paid from products which are harmful for health or environment○ From the consumer price of gas, over

64% are taxes. 24% of them are VAT○ 60-80% of beer’s litre price consists of

taxes

Unemployment in FinlandExplained

Unemployment in Finland● 8.7 % of Finland’s population is officially

unemployed, and that is around 234 000 people

● the percentage is actually bigger, because we have over 100 000 “hidden’’ unemployed persons that are not registered as unemployed

Unemployment rate in Finland from 1989 to 2015

Main reasons for unemployment in FinlandThe main causes are:

● structural unemployment (when country is changing from industrial to services)● frictional unemployment (the time between changing jobs)● cyclical unemployment (less jobs during recession and more jobs during upturn)● seasonal unemployment (ski resorts, Snow castle in Kemi)

Youth unemployment in Finland● the unemployment rate among

young people (15 to 24-year old) is 22.7%

● such high rate is causing social problems for individuals for example ○ social exclusion○ depression

● social problems burdens the government due the rise of welfare expenses