Polish Coalition Parties Wrangle Over Tax Policy

by Ulrika Lomas, Tax-News.com, Brussels

03 October 2005

Poland's Law and Justice Party, the victors in the country's recent election, have proposed an alternative to the controversial flat tax system proposed by the runner up party, the Civic Platform, as the two parties continue negotiations towards forming a governing coalition.

The issue of taxation had played a major part in the election campaign, with much attention focusing on the Civic Platform's plan to introduce a 15% flat tax, a system popular with other governments in central and eastern Europe, but not so popular, it would appear, with the Polish electorate. Now the tax debate is continuing as the two main parties struggle to form a basis for a workable coalition.

The Law and Justice Party has proposed replacing the current three band income tax system which taxes income at rates of between 19% and 40% with something akin to the Civic Platform's flat tax, but not quite. This would entail a progressive scheme taxing the vast majority of Polish workers at 18%, and the wealthiest at 32%.

Under this plan 99.5% of Polish workers would fall under the 18% tax bracket.

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