Poland Will Tax Savings Income And Gains

by Ulrika Lomas, Tax-News.com, Brussels

31 October 2001

The new Polish government has finally arrived at a more or less final version of its tax bill, which will have its first reading in the Sejm (Parliament) on 6th November. Meanwhile, however, in a recognition of the ruling coalition's multi-party make-up, the social partners are to be allowed their say on the bill's contents.

Labour and Social Policy Minister Jerzy Hausner said yesterday he is to hold talks with social partners to enable them to present their opinions on proposed tax changes: "The government has asserted that tax bills do not depend upon consultations with trade unions. The Finance Minister has however passed the information on, and the cabinet has told the Labour and Social Policy Minister to hold talks with social partners to enable them to present their opinions on proposed tax changes by Monday," Hausner said.

"On behalf of the government I would like to say that the chief political principle of the SLD-UP-PSL government is to resume and conduct social dialogue," he added, saying that under the law on the Trilateral Commission, the parties of social dialogue include the government, the Confederation of Polish Employers, the Confederation of Polish Private Employers, the Polish Craft Chamber and two trade unions. Hausner voiced the hope that a date of the first session of the Commission would be fixed shortly, saying that social dialogue covered such issues as labour conditions, wages, social insurance.

In its latest form the tax bill provides for the freezing of tax thresholds for two years, the abolition of tax relief for new buildings, and the introduction of a 20 per cent tax on income from savings, initially just on current revenue, but by 2003 also on capital gains. The government predicts the changes will bring in around 4bn zlotys in extra budget revenue in 2002 in comparison to 2001. The Finance Ministry has said that the changes will not affect those with incomes no higher than just over 3,000 zlotys per month, and Finance Minister Marek Belka has said that those with the lowest earnings will not be affected.

The government needs every penny it can find, since it's facing a ballooning budget deficit far outside the Maastricht 3% rule; but such considerations don't weigh much with left-leaning coalition partners or the trade unions. In fact, says Ewa Haczyk, adviser of Poland's chief negotiator with the EU, Poland does not have to impose a capital gains tax. "Our country is not obliged to levy such a tax. There is no uniform legal regulation in the EU relating to taxing personal revenues or interest on saving. Each country treats the issue in an individual way," Haczyk said.

The Jerzy Buzek government however committed itself in negotiations with the EU to impose a 20 per cent lump tax on capital gains by 2003. Government spokesman Michal Tober said that Poland introduced the solution a year earlier than planned because of bad finances. "Practically all EU countries have such regulations and Poland will have to introduce it sooner or later," he noted.

Recommended