Prime Minister’s proposal to enhance the effectiveness of industrial energy tax refund a positive development

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“Recent climate and energy policy decisions will raise the forest industry’s annual energy tax bill to no less than €130 million. Finnish paper mills will in future pay many times more electricity taxes than their competitors in other countries,” Director General Timo Jaatinen said at a Finnish Forest Industries Federation’s decision-maker seminar in Rauma on 17 March.

Finland can achieve a competitive level of energy taxation if the application method of the energy tax refund mechanism is revised within limits permitted by the pertinent EU Directive. Energy taxes in excess of 0.5% of value added should be refunded in full. The present model refunds companies with 85% of the energy tax amount that exceeds 3.7% of value added.

Under the existing model, the actual level of energy taxes is affected also by the energy-intensiveness and organisational structure of the corporation in question. This aspect of the energy tax refund system must also be developed so that different companies can compete with each other on an equal footing.

“The Government and the Parliament did not deliver on the promise to revise the tax refund system that they made when deciding on energy taxation. This question should be returned to during negotiations to form the next Government. It is very encouraging that Prime Minister Kiviniemi already brought the matter up in yesterday’s interview for business daily Kauppalehti,” Jaatinen said.

The energy tax hikes that took effect at the turn of the year have resulted in a situation where the export sector of Finland pays a substantially larger energy tax bill than its rivals in other countries. The forest industry of Sweden, for example, pays no electricity taxes whatsoever – through energy taxation alone, this provides it with a cost advantage of almost €130 million when compared to the forest industry of Finland.

Further information:
Timo Jaatinen, Director General, Finnish Forest Industries Federation, tel. +358 9 132 6600
Stefan Sundman, Director (Energy and Infrastructure), Finnish Forest Industries Federation, +358 9 132 6611, +358 40 – 535 0501