Finland must eliminate taxes on dividends paid to individuals and give tax breaks to companies seeking to expand and add jobs, according to a group led by Kari Stadigh, chief executive officer of Sampo Oyj. (SAMAS)
“The message must be that risk-taking is rewarded,” Stadigh said yesterday at a briefing in Helsinki before releasing the report today. “Everything that increases owners’ willingness to take risks and boosts employment in Finland is a top priority.”
Finland has Europe’s fastest-aging population and needs 200,000 new jobs to fuel growth as the workforce shrinks and benefit spending depletes state coffers. By 2020, about 2 1/2 working-age people will support one pensioner, down from about four in 2000, the European Union’s statistics office projects.
The shrinking workforce means Finland’s potential economic growth will be about 1.5 percent a year, slower than the average 3.3 percent growth in the northernmost euro member in the decade to 2008, the Finance Ministry has said.
“Our problem is that we encourage giving out loans instead of buying shares,” Stadigh said. “We simply must identify where the loose capital is and reallocate it correctly.”
Shareholders of companies listed on Nasdaq OMX’s First North market place, the less-regulated exchange aimed at smaller companies, should pay the same tax on dividends as owners of closely held companies, the group said. That would encourage growth and bring about more listings at the stock exchange.
There were no initial public offerings on Nasdaq OMX Helsinki last year, compared with 29 IPOs last year in Stockholm and a total of 53 entrants in the Finnish capital during the information technology boom of 1999 and 2000.
Finland’s “more lenient” tax treatment of closely held companies versus listed companies “hampers” the inflow of capital from abroad and the growth of successful firms, the Organization for Economic Cooperation and Development said on Feb. 7.
Prime Minister Jyrki Katainen’s Cabinet will discuss the group’s proposals tomorrow. It sent a proposal to let pension funds make more effective use of their investment capital to parliament on March 1.
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