New Polish Import Tax Still Up In The Air

by Ulrika Lomas, Tax-News.com, Brussels

10 October 2001

A lively debate is continuing between the coalition partners in Poland's new government over a new 5% import tax which was slotted into the 2002 budget to replace a VAT increase rejected by minority partners the Peasants Party over the objections of prospective Minister of Finance Marek Belka, who comes from majority partners Democratic Left Alliance.

Mr Belka still opposes plans to impose the import tax and wants next year's budget, which has yet to be published, to be revised. Speaking during a meeting with unionists of the National Trade Union Accord on Tuesday, he said he opposed the import tax on the grounds it was a short-term solution that might produce ill effects for the economy and strenghten the zloty.

Although Mr Belka has reluctantly accepted inclusion of the tax, mostly in return for the minority partners' agreement to a strict cap on budget expenditure, it is seen highly dubious by both the EU and the WTO, which have yet to take definitive positions over its introduction. The Minister-designate said that should the tax be accepted by the WTO and the EU, the revenues obtained would be used to repay debt or to boost the economy in other ways.

The governing coalition has now taken formal shape, and signed a policy agreement this week: The Democratic Left Alliance [SLD]-Labour Union [UP] and Polish Peasant Party [PSL] coalition "entrusts the implementation of this agreement to the Council of Ministers, which is led by the leaders of the parties forming the coalition".

The agreement incorporates the parties' decision that the maximum admissible level of the 2002 budget deficit should be 40bn zlotys, and refers to the import tax: 'The participants in the SLD-UP-PSL coalition have agreed to start up procedures and analyses conditioning the undertaking of decisions over the matter of the introduction of an import tax. It has been accepted that possible incomes from this tax will not be a basis for the increase of budget expenditures.'

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