There will be a lower VAT from next year. Yes According to the draft budget prepared by the Ministry of Finance. Program 500+, the restoration of the retirement age and other new spending mean that the government not only to withdraw from the most important tax cuts, but also announces record budget gap in history. Three-percent threshold of the public finance deficit to save local governments.
As much as 59.3 billion zł – the value can be budget gap in 2017, according to information provided by the Ministry of Finance. If the bill was passed by parliament would be an all-time record … moreover, the second on the list of “achievements”, Prime Minister and Minister Szydło Szałamacha. 54.7 billion zł deficit planned for 2016 also represented a historical record.
For comparison, the famous “hole Bauc” in 2001 was only 32.4 billion zł, which is 17 billion zł more than recorded time in the Act budget and the minister then threatened that the deficit in 2002 could reach the level of 60 billion zł. Currently, almost the same amount did not frighten the ruling, even at the design stage of the budget.
Budget revenues are expected to reach 324.1 billion zł (+3.3 per cent. Compared to the budget for 2016.) and expenses 383.4 billion zł (+4.0 percent.). Ministry stroke deficit translators cover the budget shortfall of the Social Insurance Fund (FUS), which otherwise would have to be financed by loans. At the official minus we go out also to the European Union. European funds budget close to the amount of minus 9.6 billion zł.
According to government spokesman Raphael Loaf, next Tuesday, members of the Council of Ministers will meet for an informal meeting to deal with the preliminary draft budget for next year. Its adoption is scheduled for a special meeting of the Council of Ministers on Thursday.
hole grows, because money is cheap, and are willing to lend
Together, in the years 1990-2015 Polish state issued more about than 565 billion zł received from taxes. The growth rate of the deficit is increasing at the same instant. Plans for the years 2016-2017 give up more than one-fifth of the total budget deficit since the fall of the communist regime, and the deficit alone 2,017 years will close the budget hole throughout the 90s of the last century.
the last budget surplus was shown 26 years ago in 1990, of course not because the government would then have a balanced budget, but simply nobody wanted Poland to borrow money and plenty to cover the shortfall.
Now volunteers is too much, so the government could “go crazy.” The interest rate on the bonds of many countries in the world took place recently to the lowest levels in history. Loans grew cheap and willing to borrow cheap money the more, the more central banks (ECB, Bank of Japan) for reprints money buy up government bonds on the market.
Last week at the auction of Treasury bonds Polish securities decade bought with the average yield of 2.704 per cent., the lowest since the first half of 2015., which is the best time for the Polish government debt in history.
500+ and early retirement on credit
a record budget gap stems from the government’s expenditure plans. Increased expenses, according to information “Puls Biznesu” will go on benefits for families (a total of 22.5 billion zł in 2017), and the smaller of the 2 billion zł will influence the FUS, when it enters into force the Law on the restoration of the previous retirement age. 1.4 billion zł has to go on hikes budżetówce. Lower by 3 billion zł to be the payment of dividends Treasury companies. The government had to reduce the appetites here, because companies have nothing to invest. In 2018 years come to that yet higher tax-free amount of natural persons (Constitutional Court’s judgment).
The government at the same time it does not seem more because they received funding from taxes, but because it borrows money. But it has to stick to certain limits.
So we have the constitutional limits on state debt to 60 percent. GDP and stored in the Public Finance Act, the threshold of 55 percent. GDP. After March debt was at 49.9 percent. GDP rose by up to 0.9 points. percent. since December. At this rate thresholds laws already achieve a year and a half, and constitutional – for three years.
There is a requirement on the part of the European Union do not exceed the annual deficit of 3 percent. GDP. Currently, the government’s aim is precisely to maintain the deficit within that framework, thus avoiding the bits in the form of “excessive deficit procedures” on the part of the Council of the European Union, and even possible financial sanctions if the government is not applied to the guidelines of the Council.
Ministry Finance declares that it will not have problems with financing both the Programme 500+, changes in pensions, disposable cash supplements for pensioners, the increase in military spending or free medicines for the oldest. The condition is temporarily only to keen on bonds.
There will be no lower VAT rates
To meet the plan to keep the deficit in check, and at the same time maintain a broad-based growth expenses, so there will be no next year for a reduction in VAT rates. The current rates were in line with the law in force only until the year 2016.
In April the minister Szałamacha suggested in the media that the restoration of VAT to the previous taxes starting next year probably will not, though even in the documents of the Ministry of June could such an assumption found, and the change announced earlier chairman of the committee of public finance Henryk Kowalczyk.
According to the information of “Puls Biznesu” that prepares already the second extension of the elevated in 2011 rates, which originally were introduced ” for a while “, because only by 2013. Although theoretically groundbreaking changes on the political scene in terms of taxes, nothing will change. Governments increased influence apparently liked and did not want to give them up. Currently your energy focused on trying to reduce rising after the rise of tax black economy.
According to the new draft budget revenues from VAT are to reach next year 143 billion zł, which is as much as 14 billion zł (11 percent). More than recorded Act for 2016. For comparison, in the first seven months of 2016 years VAT revenues increased by 5.2 billion zł in comparison with last year. Next year, the increase is among them inflation, which according to the draft budget will amount to 1.3 percent.
The economy is growing more slowly
Minister Szałamacha the latest data from the economy declined at the same expectations and assumes current 3 , 6 percent. economic growth, while still two months ago predicted 3.9 percent. And the pace of development of the economy depends on the level of budget revenues and the ability to finance expenditure.
In a survey conducted in June among experts by the NBP median forecasts of GDP growth, however, only 3.4 per cent., The survey does not include weak industrial production data for July – 3.4 percent lower. Every year. These take into account the already BZ WBK analysts, who next year’s growth rate is estimated to be only 2.9 percent.
Such a scenario would force the need for spending cuts, or an increase in debt, and the latter is the risk of encountering thresholds faster than for three years.
In the opinion cited by the PAP dr. Bartholomew Biga of the Center for the Club of the Jagiellonian assumptions for the project are real, but questions arise when it comes to both the income side and the expenditure sides.
– The problem with these assumptions is that the government too optimistic about budget revenue. I have repeatedly verified these forecasts after recent CSO data, but still not verified them enough for it to be real, so you may find that the budget lacks more than is assumed at this point – said Biga.
in his opinion on the issue income questions relate to, among others, effective collection of VAT and CIT can therefore still expect changes in the draft budget before it is finally adopted.
– I think that will be needed correction of assumptions, such as the Central Statistical Office will announce further data – he said.
Local governments must limit their appetites
According to calculations by BZ WBK presented preliminary data give a hole, constituting 3.1 percent. projected GDP, which is above the EU threshold. The Ministry, however, gives the number of 2.9 percent. Since the ministry says that the Social Security Fund will pay extra, as is indicated by the analysts of BZ WBK surpluses need to look in the local government sector.
“Friday’s Ministry of Finance data showed that the second quarter of 2016. Local governments had 16.6 billion zł surplus (compared to 10.5 billion zł in the second quarter of 2015.). Such a large surplus partly resulted from strong limitations investment plans. In our opinion, waiting surplus in local government could mean a further reduction of investments in this sector in 2017. “- Describe.
” The budget for next year will be tight and there is a considerable risk of exceeding the limit of 3.0 per cent. GDP public finance deficit “, give analysts of Bank Millennium.
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