Tax revenue drops by 1.9% in 2020

The accrual of taxes and compulsory social security contributions decreased by 1.9 per cent in 2020, according to Statistics Finland.

The reasons related to the coronavirus pandemic were mainly responsible for the drop of the tax revenue.

The total accrual amounted to EUR 99.5 billion. The tax ratio fell from the previous year by 0.2 percentage points to 42.1 per cent.

The tax ratio describes the ratio of taxes and compulsory social security contributions to gross domestic product.

In 2020, the net tax ratio was 15.5 per cent of gross domestic product, down by 2.7 percentage points from the previous year. The corona situation contributed to the decrease in the net tax ratio, especially due to the growth in income transfers, but also to the decrease in the accruals of taxes and social security contributions.

The value added tax revenue grew by 0.2 per cent from the previous year and was EUR 22.0 billion.

In the accrual basis of the national accounts, value added tax revenue also includes the 2020 taxes deferred to be paid during immediate future years by means of payment arrangements made due to the corona situation.

The revenue from other taxes paid on goods and services decreased by 4.0 per cent, the most significant in euros was the revenue from central government's share of Oy Veikkaus Ab's profit, which decreased by 32.1 per cent and amounted to EUR 746 million, and motor vehicle and motorcycle tax, whose revenue decreased by 19.5 per cent and was EUR 713 million.

Similarly to revenue from central government's share of Oy Veikkaus Ab's profit, the revenue from lottery tax fell considerably (by 23.1 per cent) and its revenue remained at EUR 170 million.

The revenue from energy taxes decreased by 1.0 per cent and the revenue for the year was EUR 4.3 billion. The revenues grew mainly concerning tax on soft drinks (16.1 per cent), pharmacy fee (5.3 per cent), insurance premium tax (3.9 per cent), tobacco tax (3.4 per cent), alcohol tax (2.6 per cent) and vehicle tax (1.6 per cent). Of these, the biggest revenues in euros were EUR 1.5 billion in alcohol tax, EUR 1.2 billion in vehicle tax and EUR 1.1 billion in tobacco tax.

The revenue from income tax paid by households grew by 1.6 per cent from the previous year and amounted to EUR 29.8 billion.

A significant contributor to the decrease in tax revenue was corporations' income tax, the revenue from which (EUR 5.0 billion) decreased by 17.8 per cent from the year before. The revenue from taxes on property grew by 2.8 per cent. In 2020, the revenue from inheritance and gift tax was EUR 797 million or 6.4 per cent higher than in 2019. The revenue from asset transfer tax was EUR 822 million and it decreased by 4.1 per cent from one year before.

EUR 235 million collected as contributions to the Single Resolution Fund from credit institutions was recorded as tax revenue for the institutions of the European Union. Customs duties accounted to the EU amounted to EUR 174 million.

In 2020, the tax revenue of central government totalled EUR 47.2 billion, which was 4.7 per cent lower than in the year before. The tax revenue of local government grew by 6.0 per cent and was EUR 24.5 billion. Most of the tax revenue of local government comes from households' income taxes.

The revenue of compulsory social security contributions of social security funds contracted by 3.4 per cent and contributions totalled EUR 27.3 billion. The proportion of taxes and statutory social security contributions in consolidated total general government income was 80.9 per cent in 2020.