Finland's coalition government faces internal strife after a proposal to temporarily scrap the 670 million euro property transfer tax. The idea, floated by Swedish People's Party parliamentary group leader Otto Andersson, has drawn sharp criticism from his government partners, the National Coalition Party and the Finns Party, who fear it could paralyze the housing market.
Andersson made the suggestion at his party's winter conference in Raasepori on Monday, arguing that a temporary removal of the tax, for example for one year, would stimulate housing transactions and support the construction sector. The proposal was presented as his personal view, not the official stance of the Swedish People's Party (RKP). The reaction from the other two governing parties was one of clear frustration, with sources describing the mood in background discussions as annoyed.
Coalition Partners Warn of Market Paralysis
The core objection from the National Coalition Party and the Finns Party centers on market psychology. They argue that publicly airing such a proposal risks causing potential home buyers to postpone their purchase decisions in anticipation of a future tax cut. This wait-and-see attitude could, in their view, further cripple an already sluggish housing market. The partners consider the RKP's method of public discussion on the matter to be dangerous policy.
Government allies stress that negotiations concerning possible changes to the property transfer tax should, due to their market impact, be conducted away from public scrutiny. They point to the government's actions in 2023 as a model. That year, the coalition secretly negotiated for several months before announcing a decision to ease the property transfer tax and simultaneously remove the tax benefit for first-time home buyers, thereby avoiding a period of market uncertainty.
A Question of Discipline and Procedure
The controversy highlights the delicate balance of Finland's four-party coalition government. While individual MPs frequently make suggestions, this particular intervention from a parliamentary group leader of a junior coalition partner touches on a major revenue stream and key economic lever. The larger parties view it as a breach of disciplined coalition conduct, where fiscally significant ideas should be channeled through internal government negotiations before reaching the public domain.
Otto Andersson addressed the criticism, reiterating to reporters that his suggestion was a product of his personal thinking and had not been processed as an official party position within RKP's organs. He pointed out that MPs from governing parties make dozens of proposals constantly, and such ideas do not automatically imply imminent government action. However, the distinction between a personal musing and a statement from a leading figure in a governing party appears blurred in the eyes of his partners.
The Fiscal Stakes of the Property Tax
The financial dimension of the proposal is significant. The property transfer tax is estimated to bring in 670 million euros to state coffers this year. A temporary removal, even for a year, would likely blow a substantial hole in the budget, requiring compensatory measures or increased borrowing. This fiscal reality forms the bedrock of the larger coalition partners' resistance, making any discussion of its abolition a matter of high-stakes budgetary policy, not just housing market stimulus.
The incident exposes a tactical divide within the government on how to manage economic expectations. The National Coalition Party and Finns Party advocate for a closed-door approach to prevent market distortion, while the RKP representative's public trial balloon suggests a different communication strategy. This clash of methods risks sending mixed signals to consumers and the construction industry at a time of economic fragility.
Navigating a Path Forward
The government now must navigate the fallout from this public disagreement. The immediate priority for the majority coalition partners is to contain the expectation of a tax cut and reaffirm that no such decision has been made. The episode serves as a stress test for coalition cohesion, demonstrating how sensitive tax policy discussions are and how easily they can trigger public disputes between allies.
The underlying policy challenge remains: how to revive Finland's housing market. While the property transfer tax is seen by some as a barrier to transactions, its removal carries major fiscal and market risks. The government's 2023 reform, which lowered the tax rate but removed the first-time buyer exemption, was a compromise solution reached after lengthy private negotiation. This latest public suggestion indicates that the debate over the tax's role and rate is far from settled within the governing coalition itself.
What comes next depends on whether the Swedish People's Party formally adopts the idea as party policy or lets it remain an individual's suggestion. For the National Coalition Party and the Finns Party, the focus will be on reasserting control over the narrative and ensuring future tax debates are held within the confines of government negotiation rooms, not at public party conferences. The stability of the coalition may hinge on a return to disciplined, private policymaking on economically sensitive issues.