Polish Business Community Reluctantly Accepts Need For New Taxes

by Ulrika Lomas, Tax-News.com, Brussels

12 November 2001

Entrepreneurs associated with the Polish Business Centre Club (BCC) have reluctantly afforded their support to moves by the country's Finance Minister, Marek Belka, to freeze tax thresholds and introduce a capital gains tax.

'Minister Belka's plan is to save the state budget, which also means saving the foundations of enterprise, and this forces us to accept things which we would not have accepted under other circumstances,' explained BCC President Marek Goliszewski.

The Polish government faces a ballooning budget deficit far outside the Maastricht 3% rule, and needs every penny it can lay its hands on to address this situation. However, although the BCC stated that in the short term it understands the necessity of the new taxes, it is critical of the idea as a mid to long term measure.

'We have pointed out on many occasions that the actions taken by the Polish authorities in relation to income tax go against the tendencies existing in the majority of the developed and developing countries,' Mr Goliszewski told reporters at a recent press conference. 'In Russia, for example, income tax has been lowered by as much as 13 percentage points and this move has contributed to an increase in budgetary revenue. Whereas in Poland's case, following the freezing of tax thresholds, one can expect a further reduction in legal employmant and a widening of the grey zone.'

The BCC President announced that the Polish business community would expect the Finance Minister to begin lowering the tax rates one year earlier than previously announced, reasoning that entrepreneurs and business people need to feel that the period of sacrifice is a finite one.

The final draft version of the tax reform bill underwent its first reading in the Sejm, or Parliament, on the 6th November.

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