Tax On Savings Interest Hitting Polish Banks

by Ulrika Lomas, Tax-News.com, Brussels

11 June 2002

It emerged last week that a 20% tax on savings interest imposed in March in order to raise additional revenue has hit Polish banks hard.

Speaking to the Warsaw Businesss Journal, Deputy and Vice Chairman of the Sejm's Public Finance Committee, Zyta Gilowska lamented the continuing fall in individual savings levels.

'The last argument for saving has been lifted and we are returning to communist times, when savings were exchanged into dollars and kept under the bed,' she explained.

Inflation, falling interest rates, high banking fees, and penalties charged by banks on small deposits have all also been cited as factors behind the decline in savings levels.

However, the Polish government says that the tax is accomplishing its aim. According to Finance Ministry figures, Zl 23.2 million ($5.8 million) was collected from the tax on savings deposits in the month of its introduction alone.

Jacek Wioeniewski, a Bank Pekao analyst told the WBJ that although some of the assets withdrawn from Polish banks following the introduction of the tax have undoubtedly become what is known as 'mattress money', Poles have also been using the money to sustain their level of disposable income.

Some of the withdrawn assets have been directed towards investment funds, as profits generated from such investments are not - yet - subject to taxation.

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