After living in Germany (Saksa) for many years, this is no surprise to me. In fact, it’s quite obvious. According to an advance release of a report by the EU which examines the purchasing power (ostovoima) of university educated professionals:
“Suomi keikkuu viimeisenä ja Saksa ykkösenä. Saksassa ostovoima on lähes kaksi kertaa niin iso kuin Suomessa.“
It states that Finland has the lowest purchasing power, and Germany has the highest. Furthermore, Germany has nearly double the purchasing power of Finland. A few other countries that beat Finland are England, Holland, Belgium and Spain. How can this be?
“Heikkoa ostovoimaa selittävät kova verotus ja kilpailun puute. [...] Tutkimus selittää Suomen heikkoa menestystä ankaralla verotuksella ja korkeilla hinnoilla sekä osin myös alhaisilla palkoilla.“
Again, no surprise, it reads that the poor purchasing power is because Finland is severely overtaxed and there is very little competition in the consumer marketplace (in my opinion, the low-competition is a macroeconomic result of both, overtaxation and inflexible unions). All this with relatively low salaries.
My wife and I have a home in Germany but occasionally spend time in Finland to be with family. I can tell you from personal experience that it’s true: The difference in purchasing power between Germany and Finland is quite enormous.
We always bring food, beer, wine, building supplies, clothing, etc., from Germany so we don’t have to buy them in Finland. The savings pay for our travel expenses and more. I even brought a whole shipment of wood and cabinets from Germany to renovate our summer cabin and flat in Finland—saved 30% overall, including truck rental and travel costs.
A few things to consider:
- Finland has 22% regular VAT and 17% food VAT, which make it the second-highest taxed country in Europe when these amounts are combined. Only Denmark is higher.
- Automobiles in Finland cost roughly double the German price due to Autovero; a family can lose 10KÃ¢â€šÂ¬ to 20KÃ¢â€šÂ¬ in one shot to this tax, especially if two cars are needed. Public transit availability is not very good, despite 1M+ residents in the Helsinki region. Many families need two cars.
- The state-run Alko, along with Alcohol Policy, means that even social drinking costs people dearly; many times the central European price.
- Overly-high Income Taxation causes a sizable Tax Wedge that ensures both, low-Gross and low-Net Salaries. Also, quite astonishingly, Finland publishes the private income information of all its residents for anyone in the world to inspect (verotietojen julkistaminen)!
The average Finnish family, even if it practices frugality, loses many thousands of Euros each year to the assorted ripoffs listed above—along with many more. Everything from Restaurants to Haircuts to Taxi Fares in Finland costs about double the normal central European price. And Finnish salaries don’t compensate for the overpayment.