The Finnish Ministry of Finance has set up a working group to study the possibility of introducing a negative income tax to support the income of individuals, the ministry said.
“Income tax may be negative for low-income people, retirees and entrepreneurs,” the report said.
The changes essentially provide that for those whose taxes are not sufficient under the current system for a full deduction, a deduction in excess of the tax amount will be payable to the taxpayer (negative taxation).
The working group is also exploring the modalities for conducting an income support experiment. The experiment is scheduled to begin in early 2023. The experiment uses the experience of the basic income experiment conducted in Finland in 2017–2018.
The working group includes representatives from the Ministry of Finance, the Ministry of Social Affairs and Health, Kela (social agency) and the tax administration. The term of office of the working group expires on June 30, 2022.
The government plans to develop guidance on the introduction of a negative income tax in the summer of 2022, the report says.