If the plan is approved, both wage-earners and municipalities will have to pay less taxes to the state government. This is an attempt to make up for the recent rises in health insurance, unemployment insurance, and municipal taxes, among other things.
Next year, tax cuts will cost the government 350 million euros, in 2006 the cost will climb to 550 million. Vanhanen said that after this, there will be no more income tax reductions.
One of the biggest changes is that the government plans to abolish the capital tax. This is seen as a nod to wealthier residents, since income tax cuts will be geared towards small and mid-sized incomes.
All of this hinges on whether the individual unions will approve the deal that their negotiators have brought back to them.
