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Government programme relies on positive economic growth and higher employment – has both good and bad news for SMEs

The government programme is better than originally feared, even if improvements to the conditions for entrepreneurs and small and medium enterprise are still needed.

Mikael Pentikäinen, the CEO and President of Suomen Yrittäjät (Entrepreneurs in Finland), says that the government programme drawn up by the SDP’s Antti Rinne does not make large changes to the conditions for small and medium enterprise for better or worse. Before the programme was finalized, SMEs were worried about tax increases and other reforms that would make doing business more difficult.

“Entrepreneurs’ tax burden will stay at roughly the same level, and small businesses may even see their tax bills go down. Many other projects that could have been problematic for SMEs were not included in the government programme during the negotiations. The programme is better than had been feared. There are several tactical victories. Many issues are going to be discussed by working parties. We’ve received assurances that our organization is going to be involved in them,” Pentikäinen says.

He is grateful that Suomen Yrittäjät has been listened to during the government negotiations.

In Pentikäinen’s opinion, stiff international competition requires improvement of the conditions for entrepreneurs and small and medium enterprises, which is not now happening to a significant extent.

The entrepreneur’s tax credit is to be retained, while limitations will be introduced to the tax credit for household expenses.

Mika Kuismanen, Vice President Economics and Chief Economist at Suomen Yrittäjät, says the government programme’s financial policy is too lax, as it is based on an assumption of strong economic growth and higher employment.

“It still fails to address the problem of fiscal sustainability, and the necessary adjustments to public finances will be passed on to future governments,” Kuismanen says.

A significant development for entrepreneurs is the retention of the entrepreneur’s tax credit and the preservation of unlisted share companies’ dividend taxation at the current level. The restrictions to the tax credit for household expenses is bad.

“The household expenses tax credit increases demand for labour and reduces the size of the shadow economy. It is not the correct tool for income distribution,” Kuismanen says.

Improvements to debt recovery charges, payment terms and insolubility regulation

The government programme contains several measures on company legislation that match Suomen Yrittäjät goals. A euro-amount upper limit for debt recovery charges will be set for entrepreneurs. The government will investigate the need to amend legislation on insolubility and payment terms, as well as the need for legislation on the position of small entrepreneurs.

“We have long been calling for changes to regulations on debt recovery charges, payment terms and insolubility. The government programme clearly shows that the aim of developing legislation is to reinforce the operating conditions for SMEs. This is something to be satisfied with,” says Vice President Labour Market and Legal Affairs at Suomen Yrittäjät Janne Makkula.

“What is also positive is that efforts will be made to reduce the costs of regulation borne by business and to improve impact assessment for regulations,” Makkula says.

Labour market reforms needed

Suomen Yrittäjät is disappointed that the programme does not contain structural labour market reforms.

“We need labour market reforms to boost employment. If they are not achieved, the foundation for the government programme will crumble, because improved employment is a big source of funding for new spending,” Pentikäinen says.

The increased resources for education are good news.

Elina Hakola

elina.hakola (at) yrittajat.fi