Saturday 8/15/20
HIGHER TAXES

Gasoline in Finland will be more expensive from 1 August

Drivers still have time to refuel before the fuel tax increase takes effect on Saturday.

A Finnish gas station. Photo: Foreigner.fi.
A Finnish gas station. Photo: Foreigner.fi.

After a difficult year and an uncertain summer vacation due to the coronavirus, Finland's residents will start the fall with bad news for their pockets.

On 1 August, the gasoline and diesel tax increases decided during the autumn 2019 budget negotiations will take effect.

In practice, that means that tens of thousands of drivers will have to pay more money every time they fill the tank.

The rise will be, according to experts estimate, about 6.3 cents more per liter of gasoline and 6.9 cents more per liter of diesel.

The impact of this tax increase on the final price will not be small. As of Saturday, an average refueling of 40 liters of gasoline will become approximately 2.52 euros more expensive and in the case of diesel the cost will be 2.76 euros higher.

Those who need their car for example to go to work every day and fill the tank three times a month will see the cost increase by about 7.56 or 8.28 euros monthly, depending on the fuel. The additional annual cost will be between 90 and 100 euros more.

Finland's five-party coalition government announced an increase in fuel taxes during the budget negotiation in autumn 2019. The stated objective was to increase the tax collection by around 250 million euros, in order to "reduce emissions."

However, the agreed tax increase was not immediate, but was allowed to take effect after a few months, specifically on 1 August 2020.

Meanwhile, a recession

Meanwhile, the country has undergone a government change and the world has been plagued by the (then, in autumn 2019) unexpected coronavirus pandemic. As in the rest of the world, in Finland this health crisis has disrupted all macroeconomic forecasts, causing a recession and a large increase in unemployment and layoffs.

In the days leading up to the fuel tax increase, much has been written about tips to minimize its impact on long-suffering domestic economies. The tips are the usual ones: experts recommend, for example, minimizing travel by private vehicle and using public transport.

However, those recommendations, which may be good for urban residents, received a lot of criticism from residents of rural areas, which make up most of Finland. In small municipalities, where the availability and frequencies of public transport in general are poor, it is more difficult to give up the car on a daily basis.

The only consolation is that drivers still have time to refuel at least once before the controversial government measure takes effect.

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