30.08.2021 -

Reducing the electricity tax in the service sector would accelerate the achievement of climate targets and strengthen competitiveness

The Finnish Commerce Federation
The Finnish Hospitality Association MaRa
The Service Sector Employers Palta

Achieving the carbon neutrality target for 2035 requires decisions from the Government that support the low-carbon nature of service sector companies. A key decision would be to reduce the electricity tax in the service sector.

A reduction in electricity tax would also safeguard Finland’s cost competitiveness and domestic jobs. In an increasingly competitive international environment, the service sector is currently paying 45 times more electricity tax than industry.

The Finnish Commerce Federation, the Finnish Hospitality Association MaRa and the Service Sector Employers Palta propose the creation of a separate electricity tax category for service companies and to reduce the level of electricity tax by EUR 100 million on an annual basis. The decision should be on the agenda of the Government’s budget negotiations. In the long term, the goal is to have one common electricity tax category for the entire business sector.

There are currently two electricity tax classes. Excluding individual exceptions, the service sectors fall into the higher tax class together with the public sector, agriculture and households. In turn, the lower tax class includes industry, mining and certain specified service sector activities, such as data centres of more than 5 MW. At the beginning of 2021, the electricity tax for industry has been reduced to the minimum allowed by the EU. Currently, the service sector pays 45 times more electricity tax than industry.

The organisations want to point out the importance of the service sectors is invaluable to Finland. The services sector (private services and commerce) accounts for 62% of the private sector of the economy. In addition, the services sector employs a total of 1.3 million people, representing 66% of private sector employment. Similarly, the competitive strength of the service sector companies is of great importance to Finland. In 2018, the share of service industries of Finland’s value added exports was already 47%, while the share of manufacturing industries was 44%.

If the competitive strength and vitality of the services sector are not taken into account, this will have a considerable negative impact on employment and a considerable loss of income for the state, the organisations note.

Electrification of the service sector can clearly reduce greenhouse gas emissions. For example, the emission benefit achievable with electrification in the commerce sector is more than eight times the emissions caused by the increased use of electricity. A lower electricity tax can promote investments in, for example, heat pumps, electronic transport, and digitalisation, as well as tourism around Finland.

Companies in the sector are facing increasing international competition as cross-border trade in services and goods is expanding rapidly. Digitalisation is bringing the service sector into ever stronger international competition. In order to ensure growth and internationalisation, as well as jobs, particular care must be taken to ensure the competitive strength of companies in the sector. A lower electricity tax can support the achievement of the carbon neutrality targets of the industries and help to ensure cost competitiveness and domestic jobs.

For further information, please contact:

Mari Kiviniemi, Managing Director, the Finnish Commerce Federation, tel. +358 50 511 3189, mari.kiviniemi (at)kauppa.fi

Timo Lappi, Managing Director, MaRa, tel. +358 40 734 5549, timo.lappi(at)mara.fi

Tuomas Aarto, Managing Director, Palta, tel. +358 40 152 0073, tuomas.aarto(at)palta.fi