Finland’s government unveiled sweeping tax cuts in its 2025 mid-term budget, aiming to revitalise investment and bankroll a major defence spending hike.
Prime Minister Petteri Orpo’s coalition announced a reduction in corporate tax from 20% to 18% and a €1.1 billion cut to personal income levies, with the top marginal rate dropping sharply from 60% to 52%.
The reforms, branded as a bid to make Finland “Europe’s most investor-friendly economy,” accompany plans to boost defence expenditure to 3% of GDP by 2029, exceeding NATO’s 2% baseline.
The tax overhaul comes as Helsinki pivots to address heightened regional security concerns, channeling funds into military upgrades. However, financing the cuts through withdrawals from the national pension fund will push Finland’s deficit to €12.3 billion (4.4% of GDP) next year.
Orpo defended the strategy, insisting temporary deficits are essential for competitiveness and sovereignty, though opposition parties lambasted the move as reckless.
