Kauppalehti previously reported that as many as 86 percent of economists are not in favor of lowering fuel taxation.
Economists believe that the rise in fuel prices is due to the normal functioning of the market. In addition, there is no certainty whether the tax cuts would eventually show up on the gas pump. Even if the tax cuts were reflected in refueling, high-income people would benefit the most from lower fuel prices.
As the war continues, sanctions mourn the living standards of citizens both in Russia and in the countries that imposed sanctions. However, the truth is that the people pay the cost of the sanctions.
EU citizens still have support for the sanctions. However, there is much less support for sanctions if they negatively affect your own standard of living.
“About 60% of Europeans are not prepared for sanctions to raise energy or food prices,” says Pellervo Economic Research managing director Markus Lahtinen on his blog.
Analogue countries, such as Sweden, Germany and the Netherlands, have reduced taxes on energy prices. In Finland, these measures have not been taken.
According to Lahtinen, lowering energy prices is a cost-effective means of signaling to citizens that the negative effects of sanctions are being limited.
The debate on the reduction of the fuel tax will remain in the budget debate next autumn. The cost of the tax rebate to public finances also raises many questions. According to Lahtinen, the tax reduction should be temporary and expire without a separate decision. This would limit the negative effects of the tax cut on public finances.
Lahtinen sees the situation as a risk for citizens to turn against sanctions on a broad front. Domestic political contradictions undermine the unity of the West, which has been the West’s biggest weapon against Russia since the start of the war.
“A possible rise in the influence of the populist far right in the West would break the anti-Russian front and increase domestic political confrontation. The end result would be Russia’s victory in the war and its inability to make decisions that improve the well-being of its citizens in the West, ”Lahtinen writes.
According to Lahtinen, a decline in well-being would not be purely economic. Climate policy goals would ultimately be threatened if the populist far-right gets to determine the content of politics in the West.
“In the end, the threat would be an uncontrollable circle of bad politics, as a result of which democratic institutions would lose their ability to govern societies,” Lahtinen concludes.