Finland's
government will cut capital gains taxes on timber sales to help its
paper sector, which accounts for almost a fifth of the country's
exports, cope with a shortage of raw materials, Reuters reported.
Finland's
forests are mostly owned by individuals and the tax cut is meant to
persuade more of them to sell wood to big paper makers such as Stora
Enso, UPM-Kymmene and M-real, to help offset the effects of a trade
battle with Russia.
The
cost of the reduction in wood tax would be about Euro 170 million in
2009, the government said. Taxes would be reduced by 50% from April
2008 to end-2009 and by 25% in 2010. The Finnish Forest Industries
Federation welcomed the move and said it showed the government took the
raw material shortage seriously.
"It
is a positive attempt, provided that it will significantly increase the
amount of domestic wood supply in Finland at a price which is more
competitive than today," said UPM Chief Executive Jussi Pesonen, who
chairs the federation.
"Competitive
wood price and availability is one of the fundamental requirements for
the long-term development of the forest industry in Finland. Otherwise,
the industry cannot carry on profitable business in its current form,"
he said.
But
M-real Chairman Kari Jordan said problems remain: "One has to remember
the tax change will not solve problems with birch fibre." Finland does
not have enough birch fibre, a main raw material for many pulp mills,
and has imported it from Russia.
Russia,
an important source of wood for Finnish producers, raised export duties
by 50% in April to Euro 15 per cubic metre, and has said it would raise
duties to Euro 50 per cubic metre by 2009, which would more than double
the cost of wood. Finland plans to impose a new tariff on goods
transported across Finland to Russia and compensate paper makers for
higher costs.
