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Kesko Oyj : Welfare society and taxation was the theme of the Day of Commerce

Kesko Oyj : 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 IndustriesEK; 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 1053 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.

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Source: Kesko Oyj via Thomson Reuters ONE
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