Polish Government Backtracks On Corporate Tax Reductions

by Ulrika Lomas, Tax-News.com, Brussels

11 October 2002

Poland's left-wing government under Leszek Miller has had a year to put some substance behind its trendy 'Entrepreneurship First' slogan, obviously picked up from the Gordon Brown Academy of Spin, and judging by the reaction to its recently-published budget for 2003, it has failed lamentably.

Not only has the government increased public sector wages (laughably called a 'supply-side' reform), abandoning the fiscal rectitude established by previous Finance Minister Marek Belka, but it has failed to make any progress in tackling unemployment and is heavily criticised for failing to encourage investment. Economists say that existing assets are fully utilised, leaving no space for growth.

Efforts to improve low levels of tax collection have also come under fire as inadequate or plain foolish, with a tax amnesty plan being denounced as overly optimistic and unrealistic.

Now the Finance Ministry is back-tracking on the previous administration's promised cuts in corporate income tax, saying that the current 28% rate will fall only to 27% in 2003, instead of the 4% cut to 24% incorporated in an existing regulation. A proposed further 2% cut to 22% in 2004 is also now on the cutting-room floor.

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