The increase in tax-free amount to 8 thousand. zł – as he wants President-elect Andrzej Duda – it costs approx. 21.5 billion zł. Roughly how much annual receipts from CIT. You do not save that amount, no one dares to raise levies, and tax collection is not possible to improve from day to day.
However, if the free allowance has been raised to 8 thousand. zł without raising taxes, reduce spending or zip seal dues collection system, would increase the budget deficit. This in turn would expose us to the risk of taking the EU’s excessive deficit procedure, where the image of June we expect. In addition, the deficit would have to be financed, incurring additional debt.
Almost all experts agree that for years unaffected by tax-free amount is in Poland too low. Nobody questions, too, that should increase, because households with the lowest income in Poland is proportional to income tax more heavily than the more wealthy, or households in other developed countries. With free amount of approx. 3 thousand. zł Polish treasury collects tax on income that do not guarantee even a minimum standard of living.
Cost of the order of 21.5 billion zł
For raising the tax-free amount to 8 thousand . However, the state will lose zł thick billions of dollars. The report of the Center for Economic Analysis CenEA is clear that raising it to approx. 8 thousand. zł mean additional costs for public finances in the amount of approx. 21.5 billion zł. This amount złożyłyby lower personal income tax revenue by approx. 18.4 billion zł and lower income from contributions to the NHF about 3.5 billion. It uszczupliłoby revenues to state coffers by a total of 21.9 billion zł, but the growth of income of Poles would allow for savings in family benefits by approx. 0.4 billion zł.
For comparison, according to a report in the implementation of the budget for Inland Revenue and earnings last year amounted to 283.5 billion zł, expenses – 312.5 billion zł, and the deficit – 29 billion zł. The impact of VAT is zł 124.2 billion; excise tax – 61.5 billion zł; CIT zł 23.2 billion, and PIT – 43 billion zł.
However, as indicated recently revealed IMF report, in our country we have problems mainly with tax collection rates, mainly CIT and VAT: “Revenue from CIT as percent of GDP in Poland have also been falling since 2008. The decrease in the percentage level of corporation tax levied is greater than the decrease in VAT levied and is 33 percent, which is equivalent to 0.9 percent of GDP since 2007. However, in the medium term, revenues from CIT are generally more volatile than revenue from VAT (because profits are generally more volatile than consumption.) In addition, the decline recorded in Poland also occurred in other European countries. In spite of everything, the continued decline in CIT is significant and may indicate a potential increase in risk in fulfillment of tax obligations by taxpayers. “
We pay less taxes
The Fund’s report indicates that” efficiency in tax collection has deteriorated significantly during the crisis and not improved “. According to the IMF poor performance results are inconsistent with those of other countries in Europe, where the level of tax collection in relation to GDP has returned to levels recorded before the crisis.
Is the Polish public finances thus become Andrzej Duda’s proposal? It is true that the Poles will be able to spend more, but for the Inland Revenue is a paltry consolation. Cut spending by more than 20 billion zł appear to be as difficult as the opportunity to collect extra money from taxes. Even more so in a situation where the government – despite the intentions of the Ministry of Finance – resigned from the introduction used in almost all civilized countries of the so-called. anti-avoidance clause. It was to enable effective prosecution of companies that use aggressive tax optimization. The finance ministry said that in this way the budget is losing billions of dollars a year.
Money for a significant increase in tax-free amount would have sufficed if the state put an end to fraud in VAT. However, it soon will not happen – it is necessary for implementation – including at EU level – the entire set of long-term and large-scale systemic and preventive measures, including the introduction imprisonment for extortion VAT. According to experts from PwC last year called. VAT gap amounted to approx. 42 billion zł (after a decline of almost 5 billion zł in 2013.). Its size is the result mainly of fiscal crime (struggling with this most EU countries) gray zone, errors made by taxpayers, or the use of unfair tax optimization by companies, but also weak tax collection. According to specialists of PwC complete elimination of the tax gap in VAT is not possible, but it can be reduced by approx. 31.5 billion zł.
Recommendations IMF
Also, the recommendations of the International Monetary Fund that the above-cited report pointed out Poland, the low level of tax collection, fail to incarnate the Ministry of Finance of meals per day, not to mention the first effects of the changes. Last week, Deputy Finance Minister Jacek Kapitsa announced that at the end of July this year will be ready the tax administration strategy. He promised that it will be taken into account the recommendations of the IMF.
– For raising the tax-free amount will benefit the vast majority of taxpayers paying in PIT system according to the scale on the other hand, however, the question arises about the cost of these solutions for the budget State and of those to whom the individual tax preferences should be addressed. 21.5 billion a year seems to be out at the expense of difficult to bear without look for significant income from other sources – rated CenEA director Dr. Michael Myck.
According to him mending holes through increased income tax revenue will not be easy. The calculations institute shows that, for example, raising the basic rate of 18 per cent PIT. to 19 percent. (At the current amount of free) would give budget approx. 5.4 billion zł per year. Back to the system prior to 2009. (Rates of 19 per cent., 30 per cent., 40 per cent.) Would give the budget approx. 12.1 billion zł per year. That’s only half the required amount, despite the fact that you can not see the brave, who proposed the withdrawal of tax changes made by the PiS.
According to the Bank’s chief economist Ignacy Morawski FDI in the short term there is no possibility of financing proposed by Duda changes. The fastest – for three-four years. And so it would not have worked without painful for some taxpayers changes. Hole in the budget would have to be because somehow patch; for example by tax increases for those with the highest incomes, or unify VAT at the level of 17-18 per cent. The latter in particular proposal would be very difficult to push through a political point of view. Indeed uniform VAT would hit the poorest families that a significant proportion of their income they spend on food is taxed lower rates.
The solution could be found in savings. The problem is that Poland still needs to be done, if it wants to achieve a general government deficit of 1 per cent. GDP. Currently we have less than 3 per cent., And reduction by another 2 percentage points. within two years it means that we should save about 35 billion zł. – These savings should be found before we start thinking about tax changes – said Morawski.
Member of the Board Deloitte Rafal Antczak estimated that an increase in tax revenues of approx. 20 billion zł would require raising VAT by 3-4 points percent, which no one agrees. In contrast, about one-third cut red tape in the public sector would result in the amount of 15-16 billion zł. In his opinion, damage to the budget within a few billion zlotys been able to absorb without changing spending. However, if it comes to approx. 1.5 per cent. GDP is the money they need to borrow, found on the side of taxes or spending. Therefore, anyone who makes a nice taxpayers proposal should present – as in the case of a bill – Regulatory Impact Assessment – says Antczak.
The problem with finding a financing to raise the tax-free amount to 8 thousand. zł do not see the unions. According to the spokesman of the President of KK “Solidarity” Marek Lewandowski postulate president-elect is rational, and the switching costs would not be a threat to the budget. On the one hand, a significant portion of the money earned by taxpayers would be moved to the state coffers in the form of taxes: VAT, excise, CIT, etc. – On the other hand – and this is important – a significantly propel a domestic consumption, and thus our economy. It must be remembered that the money saved households immediately spend on current consumption – added Lewandowski.
Duda proposes raising the tax-free amount to at least the first 8 thousand. zł from the current 3091 zł, then continued a gradual increase. He announced that change will be one of the first legislative initiatives after taking the mandate of the president. Duda admitted that the change will be associated with a lower tax revenues (pointed out that according to some experts would cost approx. 12 billion zł per year), and people will have more money. How did you spend, the state gets higher VAT will also rise demand, which will be positive for the economy.
– Given this, what is the tax gap, the gap of VAT, which dates back to between 35 and 55 billion, so the same improving the tax system will certainly result in a significant impact, even if the VAT to the Treasury – said Duda.
PAP, abo
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