“There are many different types of business subsidies and, instead of looking for easy ways to cut them, the needs to develop the business subsidy system should be examined from a broader perspective. The renewal of the business subsidy system should aim to change the subsidies so that they provide stronger benefits for both companies and society. At the same time, they should support growth and renewal and, from a wider perspective, the well-being of society. To compensate for any harmful effects, the social rate of return of a business subsidy should be very high”, Professor Timo Kuosmanen emphasises.
“The objective of the development work would be to increase market competition, rectify market distortion and promote the conditions for growth of profitable companies. Cutting subsidies that preserve the economic structures and eliminating companies’ tax subsidies would bring savings”, Kuosmanen continues.
“The business subsidy system is linked to many policy sectors, such as the innovation policy, industrial policy and tax policy as well as the State ownership policy. EU regulation brings its own significance to the overall picture. For instance, companies’ R&D subsidies are connected with the innovation policy that should, from the perspective of promoting economic growth, also acknowledge the operational preconditions of start-up and growth companies, among others. The tax subsidies of companies are, on a broader level, linked with the tax system, which should be developed to be clearer, simpler and more transparent”, Kuosmanen points out.
Companies need high-quality competence
“The message of the business subsidy report is clear: increasing companies’ R&D activities is not a question of incentives but, rather, limited mostly by the lack of new ideas and professionals. Higher education plays a key role when looking for a solution to this. Universities and universities of applied sciences create a foundation of knowledge and innovation on which the research and development activities of companies are built. To safeguard the high quality education and research that higher education institutions provide, a long-term strategy is needed that will enforce the core funding of universities and their possibilities to meet the R&D requirements of business life”, states Maria Löfgren, the President of Akava.
“We have proposed that higher education institutions be capitalised with two billion euro and that the State’s R&D funding be allotted directly to them. This report reinforces our view that it is pertinent to utilise the State’s shareholding for the capitalisation of higher education institutions”, Löfgren continues.
“It is a difficult scenario to endeavour to import productivity growth while simultaneously adjusting State finances. The renewal of the business subsidy system would provide tools for this, as is shown in the recent report. Allocating subsidies for projects with high social benefit, moving the focus from large companies to SMEs and increasing loan-weighted subsidies would restore public finance and, at the same time, promote productivity growth”, says Löfgren.
Read the summary of the report
Read the report here
Follow the report presentation and discussion on the development of the business subsidy system on 21 October at 8.30–10.00 a.m. online at https://vimeo.com/event/5387195
Further information
Timo Kuosmanen, Professor, tel. +358 (0)50 466 4162
Maria Löfgren, President of Akava, tel. +358 (0)40 568 2798