Welfare society and taxation was the theme of the Day of Commerce

KESKO CORPORATION PRESS RELEASE 21.01.2013 AT 15.00 1(2) The Day of Commerce seminar, organised by Kesko for the 16th time in Helsinki today, attracted about 600 participants from among trade and industry. The speakers of the seminar were Henna Virkkunen, Minister of Public Administration and Local Government; Ilpo Kokkila, Chairman of the Board of the Confederation of Finnish Industries EK; Pekka Laaksonen, Valio CEO; Juhana Vartiainen, Director General of Government Institute for Economic Research VATT; Leena Mörttinen, Director of EK; and Fatbardhe Hetemaj, Business Manager of VMP. The theme of the Day of Commerce was the welfare society and taxation. The key issue of the day was the level of welfare services Finland can afford to provide in the future. The seminar was opened by Kesko's President and CEO Matti Halmesmäki, who said that the welfare services preserved by public funds are in danger. In Finland, direct and indirect taxation is already extremely high and the growing welfare services are financed to a great extent by borrowing. Minister of Public Administration and Local Government Henna Virkkunen assessed the impact of the reform in local government structures on the economies of municipalities. According to Virkkunen, there are in the core of the reform three major issues that all Finns should discuss seriously: 1. How will the Finnish welfare society manage in the 2020s and 2030s?, 2. How will the municipality-based system stand in the 2020s and 2030s?, 3. How much extra financial burden we will have to put on the shoulders of small age groups in the 2020s and 2030s? "According to the report by the Ministry of Finance estimating the sustainability gap of public economy, the change in the age structure of population alone involves a pressure for additional five billion euros to the welfare services offered by municipalities by the beginning of the 2020s. If municipalities are expected to finance this by their tax revenue alone, it would mean an increase of seven percentage points to the municipal tax rate. Tax rate differences between municipalities are already significant, up to five percentage points. If we continued with the current local government structure and financing model, the difference in tax rates might grow to even 15 percentage points during the next three terms of municipal councils. It is evident that major reforms are now needed both in structures and operating systems," said Minister Virkkunen. Ilpo Kokkila pointed out that without successful companies which provide employment and make investments we will not be able to finance welfare services. "Finland is losing competition both on the export market and in terms of the amount of investments directed here. In order to finance our welfare services in the years to come, it is time to change the operating environment of companies attractive to investments and make exports competitive again. It takes a lot of work- from all of Finns," said Kokkila. Pekka Laaksonen said that only work creates genuine value and only brainwork creates wealth. Laaksonen would rather tax genuine values and cash flows, not market prices and yield expectations. According to him, incurring debt is something not to be encouraged. Leena Mörttinen said that welfare and growth of Finland will continue to be based on the high level of competence both in exports and on home market. "Domestic demand has been provided a strong foothold for total demand when the world market has been floundering. Growth is also a structural issue in Finland. Incentives for entrepreneurship, ownership and healthy risk taking should be put in order. A new Finnish success story is not created by choosing winners but believing in enterprise. This should also be reflected in decisions on taxation." Juhana Vartiainen presented the Swedish labour definition which allows a margin to the economy in order to preserve the welfare society. He also spoke about the new division of labour between various sectors and industries. According to VATT's analysis, the trading sector will probably be one of the winners of the structural change. Its importance as a labour intensive sector will be highlighted in Finland in the future. The closing speech of the seminar was given by Fatbardhe Hetemaj, who was named as Refugee Woman of the Year in 2009. She pointed out that new taxpayers are needed to Finland. According to Hetemaj, it would benefit all, both from the viewpoint of competitiveness and social wellbeing, if immigrants had more opportunities to integrate into the Finnish working life. "Everyone who is ready to work for their own and the country's wellbeing is welcome to Finland," said Hetemaj. Photos of the speakers at the Day of Commerce seminar can be downloaded from http://aineistopankki.kesko.fi/kesko en and their presentations from www.kesko.fi/presentations. Further information: Merja Haverinen, Vice President, Corporate Communications, Kesko Corporation, tel. +358 10 53 22764 Kesko (www.kesko.fi) is one of the Global 100 Most Sustainable Corporations in the World. We are a retail specialist whose chains have about 2,000 stores in the Nordic and Baltic countries, Russia, and Belarus. Our stores offer quality to the daily lives of consumers. This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Kesko Oyj via Thomson Reuters ONE [HUG#1671826]