How the model calculates

When health care is cut, queues grow and conditions worsen. Part of the saving comes back later as costlier treatment, and that part grows as long as the cut continues.

Of every 100 euros that a change to “Health” saves or brings in, 15 € comes back as extra spending on the line “Health: hospital services” in the first year, growing 10% a year, up to 60%. (The other way round if the change adds spending or cuts taxes.)

When people wait longer for treatment, sick leave gets longer and Kela's sickness allowance spending grows.

Of every 100 euros that a change to “Health” saves or brings in, 5 € comes back as extra spending on the line “Social protection: sickness and disability”, starting after 1 yr and building up to its full size over 2 yrs. (The other way round if the change adds spending or cuts taxes.)

When social security is cut, some people apply for last-resort social assistance, so the real saving is smaller than the cut.

Of every 100 euros that a change to “Social protection (incl. pensions)” saves or brings in, 15 € comes back as extra spending on the line “Social protection: social assistance and other social exclusion” every year. (The other way round if the change adds spending or cuts taxes.)

Sources: Social Affairs and Health Committee report StVM 14/2023 (bill HE 74/2023): housing allowance cuts lower housing allowance spending by €385m and raise social assistance spending by €77.2m a year (in Finnish)

When maintenance of roads and railways is cut, repairs get more expensive later and part of the saving returns as a growing cost.

Of every 100 euros that a change to “Transport” saves or brings in, 10 € comes back as extra spending on the line “Economic affairs: transport” in the first year, growing 8% a year, up to 50%. (The other way round if the change adds spending or cuts taxes.)

When education is cut, skills and productivity weaken after several years, which lowers future wages and tax revenue.

Of every 100 euros that a change to “Education” saves or brings in, 30 € is lost as revenue on the line “Personal income tax”, starting after 8 yrs and building up to its full size over 10 yrs. (The other way round if the change adds spending or cuts taxes.)

When income tax is raised, some people work less or shift income to lower-taxed forms, so revenue grows less than the static estimate. A cut works the other way.

Of every 100 euros that a change to “All earned and capital income taxes” saves or brings in, 25 € is lost as revenue on the line “Personal income tax” every year. (The other way round if the change adds spending or cuts taxes.)

Sources: Saez, Slemrod & Giertz (2012): the elasticity of taxable income – a review

When corporate tax is raised, firms invest less in Finland, shift profits to lower-tax countries and some move activity abroad over a few years, so part of the extra revenue disappears. With a cut, part of the loss comes back.

Of every 100 euros that a change to “Corporate tax rate (18% from 2027)” saves or brings in, 30 € is lost as revenue on the line “Corporate income tax”, starting after 0 yrs and building up to its full size over 3 yrs. (The other way round if the change adds spending or cuts taxes.)

When taxes on high earners are raised, some of them move abroad, don't return, or shift income to lower-taxed forms, so Finland collects less than the static estimate. A cut works the other way.

Of every 100 euros that a change to “Income taxes of high earners (top decile)” saves or brings in, 35 € is lost as revenue on the line “Personal income tax”, starting after 1 yr and building up to its full size over 4 yrs. (The other way round if the change adds spending or cuts taxes.)

Sources: Kleven, Landais, Saez & Schultz (2014): migration and wage effects of taxing top earners, evidence from Denmark; Saez, Slemrod & Giertz (2012): the elasticity of taxable income – a review

People on low and middle incomes spend most of their income. When their taxes rise, consumption falls by nearly the same amount, and the VAT on that spending is lost. A cut raises consumption.

Of every 100 euros that a change to “Income taxes of low and middle incomes” saves or brings in, 15 € is lost as revenue on the line “Value added tax” every year. (The other way round if the change adds spending or cuts taxes.)

When people on low and middle incomes spend less, company sales and profits fall, which lowers corporate tax revenue. Wider effects on jobs and growth will be added later with multiplier effects.

Of every 100 euros that a change to “Income taxes of low and middle incomes” saves or brings in, 3 € is lost as revenue on the line “Corporate income tax” every year. (The other way round if the change adds spending or cuts taxes.)

When everyone's income taxes rise, consumption falls, especially among low and middle incomes, and VAT revenue is lost. The effect is smaller than for a rise on low and middle incomes alone, because high earners save more of their income.

Of every 100 euros that a change to “All earned and capital income taxes” saves or brings in, 8 € is lost as revenue on the line “Value added tax” every year. (The other way round if the change adds spending or cuts taxes.)

When VAT is raised, prices rise and consumption falls somewhat, so revenue grows less than the static estimate.

Of every 100 euros that a change to “General VAT rate (now 25.5%)” saves or brings in, 10 € is lost as revenue on the line “Value added tax” every year. (The other way round if the change adds spending or cuts taxes.)

A small increase raises revenue almost fully, but with a larger increase more people buy their alcohol in Estonia, and part of the extra revenue is lost.

Of every 100 euros that a change to “Alcohol excise” saves or brings in, 50 € is lost as revenue on the line “Alcohol excise” for the part of the lever change beyond 10%. (The other way round if the change adds spending or cuts taxes.)

Sources: THL blog: Cheap alcohol would collapse alcohol tax revenue (revenue, traveller imports and the 2004 cut; in Finnish)

Pricier alcohol reduces consumption and alcohol-related harm, which lowers health care spending after a few years.

Of every 100 euros that a change to “Alcohol excise” saves or brings in, 20 € is saved on top on the line “Health: hospital services”, starting after 1 yr and building up to its full size over 3 yrs. (The other way round if the change adds spending or cuts taxes.)

Sources: THL blog: Cheap alcohol would collapse alcohol tax revenue (revenue, traveller imports and the 2004 cut; in Finnish)

The government estimates that social security cuts encourage work, which raises tax revenue after a few years. If the cuts are reversed, this effect is lost.

Of every 100 euros that a change to “Government's social security cuts” saves or brings in, 30 € comes in as extra revenue on the line “Personal income tax”, starting after 1 yr and building up to its full size over 3 yrs. (The other way round if the change adds spending or cuts taxes.)

When outpatient care – for example primary care and mental-health services – is cut, some illnesses drag on and lead to a disability pension a few years later. The increase shows in sickness and disability spending.

Of every 100 euros that a change to “Outpatient care” saves or brings in, 10 € comes back as extra spending on the line “Social protection: sickness and disability”, starting after 3 yrs and building up to its full size over 5 yrs. (The other way round if the change adds spending or cuts taxes.)

When social security is cut, poverty deepens among the lowest-income families. Research links child poverty to the need for child welfare and later problems, so part of the saving comes back over the years as spending on family and children's services.

Of every 100 euros that a change to “Social protection (incl. pensions)” saves or brings in, 5 € comes back as extra spending on the line “Social protection: families and children (incl. early childhood education)”, starting after 2 yrs and building up to its full size over 8 yrs. (The other way round if the change adds spending or cuts taxes.)

When basic research is cut, less new knowledge and innovation emerges, which slows productivity growth and lowers wages and tax revenue after a long lag. Finland has a statutory target of raising R&D spending to 4% of GDP by 2030.

Of every 100 euros that a change to “Basic research” saves or brings in, 30 € is lost as revenue on the line “Personal income tax”, starting after 7 yrs and building up to its full size over 10 yrs. (The other way round if the change adds spending or cuts taxes.)

When research and development support for business (for example Business Finland funding) is cut, firms do less product development, which slows productivity and lowers later profits, wages and tax revenue.

Of every 100 euros that a change to “Research and development” saves or brings in, 30 € is lost as revenue on the line “Personal income tax”, starting after 5 yrs and building up to its full size over 8 yrs. (The other way round if the change adds spending or cuts taxes.)

When elderly care (service housing, home care) is cut, some older people have to wait in hospital for a care place. A hospital day costs about twice a day in service housing, so part of the saving comes back as health spending within the same year.

Of every 100 euros that a change to “Old age (elderly care services)” saves or brings in, 30 € comes back as extra spending on the line “Health: hospital services”, starting after 0 yrs and building up to its full size over 1 yr. (The other way round if the change adds spending or cuts taxes.)

Sources: Mäklin & Kokko (eds.): Unit costs of health and social care in Finland in 2017 (THL working paper 21/2020): a health-centre ward day €308 (short-term €359), a day of 24-hour service housing €124–174 (in Finnish)

When student aid is cut, some students make up for it by working more. Their wages are taxed, so part of the saving comes back as tax revenue straight away. (Some take a student loan instead, and some spend less.)

Of every 100 euros that a change to “Student aid” saves or brings in, 10 € comes in as extra revenue on the line “Personal income tax” every year. (The other way round if the change adds spending or cuts taxes.)

Sources: Reforming student financial aid, rapporteur's report (Ministry of Education and Culture; in Finnish)

When students work more alongside their studies, some graduate later and some drop out. Skilled workers enter jobs matching their education later, which lowers tax revenue after several years.

Of every 100 euros that a change to “Student aid” saves or brings in, 20 € is lost as revenue on the line “Personal income tax”, starting after 3 yrs and building up to its full size over 8 yrs. (The other way round if the change adds spending or cuts taxes.)

Sources: Reforming student financial aid, rapporteur's report (Ministry of Education and Culture; in Finnish)

Capital gains tax is only paid when an asset is sold. When the tax is raised, owners put off sales, so fewer gains are realised and the extra revenue falls short of the static estimate. A cut works the other way.

Of every 100 euros that a change to “Capital income taxes” saves or brings in, 30 € is lost as revenue on the line “Personal income tax” every year. (The other way round if the change adds spending or cuts taxes.)

Sources: Dowd, McClelland & Muthitacharoen (2015): persistent tax elasticity of capital gains realisations −0.72 (United States)

When health care spending is cut, part of the saving comes from staff: some employees are dismissed or their fixed-term contracts are not renewed. They receive unemployment benefit until they find new work – most within a year – so the effect is largest in the first year and then fades. A change to medicines and equipment doesn't trigger it, as no own staff are involved. Extra spending works the other way, but probably less strongly, as new staff are often hired from other jobs.

Of every 100 euros that a change to “Health” saves or brings in, 2 € comes back as extra spending on the line “Social protection: unemployment” in the first year, getting 55% smaller every year after that. (The other way round if the change adds spending or cuts taxes.)

Sources: Statistics Finland: general government expenditure by function 2024 (table 12a6): compensation of employees is 44% of health spending (excl. medicines), 51% of education (excl. student aid) and 43% of elderly care; OECD (2016): Back to Work: Finland – nearly five in six displaced workers are re-employed within a year; those over 55 and the less educated more slowly (Ministry summary); Yle 23 Sep 2026: Pohjois-Savo wellbeing services county cuts 280 person-years – 50 dismissed, 14 fixed-term contracts not renewed, 88 retire (in Finnish); Yle 1 Sep 2026: at Pohjois-Pohjanmaa wellbeing services county 511 employment relationships end, 302 of them dismissals; saving €25.4m (in Finnish); Verho (2020), Economica: workers displaced in the 1990s recession were almost 50% more often unemployed five years later than a comparison group (VATT summary); Algan, Cahuc & Zylberberg (2002): public jobs crowd out private ones – in the long run a change in public employment hardly changes total employment; Faggio & Overman (2014): public sector jobs have no identifiable effect on total local private employment (England)

When health care spending is cut and some employees become unemployed, they pay no income tax or social contributions on a wage, and no employer pension or other social contributions are paid for them, until they find new work. The effect is largest in the first year and then fades. A change to medicines and equipment doesn't trigger it, as no own staff are involved. Extra spending works the other way, but probably less strongly.

Of every 100 euros that a change to “Health” saves or brings in, 2 € is lost as revenue on the line “Personal income tax” in the first year, getting 55% smaller every year after that. (The other way round if the change adds spending or cuts taxes.)

Sources: Statistics Finland: general government expenditure by function 2024 (table 12a6): compensation of employees is 44% of health spending (excl. medicines), 51% of education (excl. student aid) and 43% of elderly care; OECD (2016): Back to Work: Finland – nearly five in six displaced workers are re-employed within a year; those over 55 and the less educated more slowly (Ministry summary); Yle 23 Sep 2026: Pohjois-Savo wellbeing services county cuts 280 person-years – 50 dismissed, 14 fixed-term contracts not renewed, 88 retire (in Finnish); Yle 1 Sep 2026: at Pohjois-Pohjanmaa wellbeing services county 511 employment relationships end, 302 of them dismissals; saving €25.4m (in Finnish); Verho (2020), Economica: workers displaced in the 1990s recession were almost 50% more often unemployed five years later than a comparison group (VATT summary); Algan, Cahuc & Zylberberg (2002): public jobs crowd out private ones – in the long run a change in public employment hardly changes total employment; Faggio & Overman (2014): public sector jobs have no identifiable effect on total local private employment (England)

When education spending is cut, part of the saving comes from staff: some employees are dismissed or their fixed-term contracts are not renewed. They receive unemployment benefit until they find new work – most within a year – so the effect is largest in the first year and then fades. A change to student aid doesn't trigger it, as it is a cash benefit. Extra spending works the other way, but probably less strongly, as new staff are often hired from other jobs.

Of every 100 euros that a change to “Education” saves or brings in, 3 € comes back as extra spending on the line “Social protection: unemployment” in the first year, getting 55% smaller every year after that. (The other way round if the change adds spending or cuts taxes.)

Sources: Statistics Finland: general government expenditure by function 2024 (table 12a6): compensation of employees is 44% of health spending (excl. medicines), 51% of education (excl. student aid) and 43% of elderly care; OECD (2016): Back to Work: Finland – nearly five in six displaced workers are re-employed within a year; those over 55 and the less educated more slowly (Ministry summary); Yle 23 Sep 2026: Pohjois-Savo wellbeing services county cuts 280 person-years – 50 dismissed, 14 fixed-term contracts not renewed, 88 retire (in Finnish); Yle 1 Sep 2026: at Pohjois-Pohjanmaa wellbeing services county 511 employment relationships end, 302 of them dismissals; saving €25.4m (in Finnish); Verho (2020), Economica: workers displaced in the 1990s recession were almost 50% more often unemployed five years later than a comparison group (VATT summary); Algan, Cahuc & Zylberberg (2002): public jobs crowd out private ones – in the long run a change in public employment hardly changes total employment; Faggio & Overman (2014): public sector jobs have no identifiable effect on total local private employment (England)

When education spending is cut and some employees become unemployed, they pay no income tax or social contributions on a wage, and no employer pension or other social contributions are paid for them, until they find new work. The effect is largest in the first year and then fades. A change to student aid doesn't trigger it, as it is a cash benefit. Extra spending works the other way, but probably less strongly.

Of every 100 euros that a change to “Education” saves or brings in, 2 € is lost as revenue on the line “Personal income tax” in the first year, getting 55% smaller every year after that. (The other way round if the change adds spending or cuts taxes.)

Sources: Statistics Finland: general government expenditure by function 2024 (table 12a6): compensation of employees is 44% of health spending (excl. medicines), 51% of education (excl. student aid) and 43% of elderly care; OECD (2016): Back to Work: Finland – nearly five in six displaced workers are re-employed within a year; those over 55 and the less educated more slowly (Ministry summary); Yle 23 Sep 2026: Pohjois-Savo wellbeing services county cuts 280 person-years – 50 dismissed, 14 fixed-term contracts not renewed, 88 retire (in Finnish); Yle 1 Sep 2026: at Pohjois-Pohjanmaa wellbeing services county 511 employment relationships end, 302 of them dismissals; saving €25.4m (in Finnish); Verho (2020), Economica: workers displaced in the 1990s recession were almost 50% more often unemployed five years later than a comparison group (VATT summary); Algan, Cahuc & Zylberberg (2002): public jobs crowd out private ones – in the long run a change in public employment hardly changes total employment; Faggio & Overman (2014): public sector jobs have no identifiable effect on total local private employment (England)

When elderly care spending is cut, part of the saving comes from staff: some employees are dismissed or their fixed-term contracts are not renewed. They receive unemployment benefit until they find new work – most within a year – so the effect is largest in the first year and then fades. Extra spending works the other way, but probably less strongly, as new staff are often hired from other jobs.

Of every 100 euros that a change to “Old age (elderly care services)” saves or brings in, 2 € comes back as extra spending on the line “Social protection: unemployment” in the first year, getting 55% smaller every year after that. (The other way round if the change adds spending or cuts taxes.)

Sources: Statistics Finland: general government expenditure by function 2024 (table 12a6): compensation of employees is 44% of health spending (excl. medicines), 51% of education (excl. student aid) and 43% of elderly care; OECD (2016): Back to Work: Finland – nearly five in six displaced workers are re-employed within a year; those over 55 and the less educated more slowly (Ministry summary); Yle 23 Sep 2026: Pohjois-Savo wellbeing services county cuts 280 person-years – 50 dismissed, 14 fixed-term contracts not renewed, 88 retire (in Finnish); Yle 1 Sep 2026: at Pohjois-Pohjanmaa wellbeing services county 511 employment relationships end, 302 of them dismissals; saving €25.4m (in Finnish); Verho (2020), Economica: workers displaced in the 1990s recession were almost 50% more often unemployed five years later than a comparison group (VATT summary); Algan, Cahuc & Zylberberg (2002): public jobs crowd out private ones – in the long run a change in public employment hardly changes total employment; Faggio & Overman (2014): public sector jobs have no identifiable effect on total local private employment (England)

When elderly care spending is cut and some employees become unemployed, they pay no income tax or social contributions on a wage, and no employer pension or other social contributions are paid for them, until they find new work. The effect is largest in the first year and then fades. Extra spending works the other way, but probably less strongly.

Of every 100 euros that a change to “Old age (elderly care services)” saves or brings in, 2 € is lost as revenue on the line “Personal income tax” in the first year, getting 55% smaller every year after that. (The other way round if the change adds spending or cuts taxes.)

Sources: Statistics Finland: general government expenditure by function 2024 (table 12a6): compensation of employees is 44% of health spending (excl. medicines), 51% of education (excl. student aid) and 43% of elderly care; OECD (2016): Back to Work: Finland – nearly five in six displaced workers are re-employed within a year; those over 55 and the less educated more slowly (Ministry summary); Yle 23 Sep 2026: Pohjois-Savo wellbeing services county cuts 280 person-years – 50 dismissed, 14 fixed-term contracts not renewed, 88 retire (in Finnish); Yle 1 Sep 2026: at Pohjois-Pohjanmaa wellbeing services county 511 employment relationships end, 302 of them dismissals; saving €25.4m (in Finnish); Verho (2020), Economica: workers displaced in the 1990s recession were almost 50% more often unemployed five years later than a comparison group (VATT summary); Algan, Cahuc & Zylberberg (2002): public jobs crowd out private ones – in the long run a change in public employment hardly changes total employment; Faggio & Overman (2014): public sector jobs have no identifiable effect on total local private employment (England)