HELSINKI, May 24 — The five Finnish parties in talks on forming a government after an election five weeks ago have agreed on tax hikes worth at least €700 million (RM3.2 million), Finland’s largest daily Helsingin Sanomat reported yesterday, citing government sources.

The Social Democrats led by Antti Rinne topped the general election on April 14 with a record low 17.7 per cent of the vote, forcing them to partner up with the Centre Party and three smaller partners to form a majority government.

Ahead of the election, Rinne had promised voters he would raise taxes to preserve the huge welfare state. But his main coalition partner, the Centre Party led by outgoing Prime Minister Juha Sipila, is less keen on increasing public spending.

"The economic preconditions are that this government doesn’t need to cut spending. This government can spend significantly more both on permanent expenditure as well as on investment types of expenses,” Rinne said this week.

Helsingin Sanomat cited unnamed sources as saying the parties agreed that tax hikes worth at least €700 million were needed but that the final details remained open.

Income taxes won’t be raised, it wrote, citing sources familiar with the talks.

Speaking to reporters earlier yesterday, Rinne did not give any details on the coalition’s tax decisions.

He confirmed that the parties had reached an agreement over the form of long-planned healthcare and social services reform, which Sipila’s government was unable to push through and which caused it to resign, leading to the election.

Rinne had originally set today as his goal for presenting the new government’s programme but he said this week that the parties needed "a few additional days” due to campaigning and TV debates ahead of the European elections on Sunday.

If Rinne manages to unite the five parties that include the Greens, the Left Alliance and the Swedish People’s Party behind a joint program, the new government could be nominated within a few weeks. — Reuters