The cornerstone of unity

4 MUNICIPAL SELF-GOVERNANCE
In accordance with the Constitution, Finland is divided into municipalities whose administration is based on the 
self-government of their residents. The decision-making power of local authorities is exercised by a council 
elected by the residents. Provisions on the general principles governing municipal administration and the 
municipalities’ duties are set out in an act. Additionally, the municipalities have the right to levy municipal tax. 
Municipalities in Finland have wide-ranging powers. In accordance with the Local Government Act, local 
authorities perform the functions that they are responsible for by virtue of their autonomy and those they are 

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required to do by law. In other words, functions that are common and important to residents and which are not 
performed by other authorities. Local authorities can be allocated or deprived of functions or rights by legislation 
passed to this effect. Those functions constitute the municipality’s specific sphere of authority. Extensive 
functions that fall within the specific sphere of authority include education, health care and extensive social 
welfare services. Furthermore, the municipalities are responsible for matters related to the residents’ free-time, 
recreation, housing, and the management and maintenance of their living environment (i.e. roads, streets, water 
supply and sewerage), as well as land-use planning and functional municipal infrastructure. 
In Finland, municipalities indeed have the exclusive and rather extensive power to decide the principles of 
municipal land use, in other words, in practice the monopoly on land-use planning. They exercise this right by 
drawing up comprehensive land-use plans and more detailed town plans that regulate land use and construction.
The goal of land-use planning is to create a safe, healthy, enjoyable, and socially functional environment that 
takes the needs of the different segments of the population into consideration and to allot enough areas for living 
and business activities. Land-use planning also makes urban structure more economical and services better 
available and promotes the beauty of the built environment as well as cultural values and biodiversity.
One of the most essential functions of the municipality is to provide adequate and quality services for its 
residents. It must also ensure the vitality of the area, i.e. secure a good environment and promote the 
development of entrepreneurship and the creation of employment.
Tax revenues have a critical role in municipal finances. The power to levy and collect taxes is one of the 
cornerstones of municipal self-governance as it ensures that the municipalities can manage the functions that 
they have undertaken to execute or that they are responsible for by law. The most important tax levied by 
municipalities is the municipal tax, which amounted to more than 18 billion euros in 2016. This included 1.6 
billion euros of corporate income tax and 1.6 billion euros of real-estate tax. The municipalities must have as 
wide a tax base as possible, also in the future, because it enables municipal self-governance as it is designated 
in the law and ensures that not all municipal resources are used performing their legal requirements.
The Finnish municipalities are naturally very diverse, and conditions vary in different parts of this extensive 
country. The state must therefore have the necessary means to even out disparities in municipal incomes to give 
residents equal access to adequate basic services irrespective of the size or location of their municipality.
One of the central constitutional principles regarding municipal self-governance is that when allocating new 
functions to municipalities, the state must also ensure that they have the necessary resources to carry them out. 
Finland must therefore have a well-functioning relationship between the state and the local authorities, as well as 
a state-
subsidy system which ensures municipal resources and residents’ equal access to services. 
Pekka Nousiainen 
– Member of Parliament 1999–2007, president of the Finnish Local and Regional 
authorities 2003
–2009, town council chairperson 2009–