The Municipal-Level Financial Flows Generated by Multi-Local Living

Regionally Divergent Impacts and Challenges for Municipal Equalization Systems

Authors

• Olli Lehtonen University of Eastern Finland (UEF)
• Hilkka Vihinen Natural Resources Institute Finland

DOI: https://doi.org/10.33357/ys.113147

Keywords:

multi-local living, municipalities, taxation, municipal equalization system, income flows

Abstract

The article examines the net income flows of the multi-local living in Finland at the municipal level. Multi-local living transfers income allocated to municipalities, especially through taxation, between municipalities. These incomes are connected to the taxation of work and housing. We analyze how these net income flows are distributed within the country and how the net income flows are allocated in relation to the equalization of the municipal state contribution system. We show that the net income flows of the multi-local living are dominated by commuting and that rural areas close to cities benefit the most from the current net income flows. In conclusion, we discuss whether the focus of tax deductions should be shifted from travel cost reductions to reductions in work accommodation or workrooms which could support longer-term employment if the aim of multi-local living is to address the labor shortage, the regional divergence or the fragmented community structure.