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Poland's New Government Needs Broader Tax Base

by Ulrika Lomas, Tax-News.com, Brussels

24 March 2016


Poland's new Government will need higher tax revenues to fund planned economic reforms, the Organisation for Economic Co-operation and Development (OECD) has said.

The 2016 OECD Economic Survey of Poland said Polish authorities should withdraw value-added tax (VAT) exemptions and reduced rates, which were worth more than 2.5 percent of gross domestic product (GDP) in 2013. This would yield much higher revenues than the envisaged tax increases on banks and retailers, and would simplify the tax system, it said.

The report recommended increasing property taxes by making them market-value-based, and taxing capital gains on rented properties.

Green taxes could also raise revenues, it said. Specifically, the report advised removing tax exemptions on fuel use, raising taxes on water and air pollution, and implementing an aviation tax and an emissions-based tax on vehicles. These measures could yield additional revenues equivalent to almost 1.5 percent of GDP in 2025, the OECD said.

The report said that the Government's plan to focus on increasing tax compliance to generate extra revenues is appropriate. VAT evasion has increased significantly, to more than a quarter of the total liability, it noted.

Finally, the report called for efficiency improvements to revenue administration.

TAGS: environment | compliance | tax | economics | value added tax (VAT) | tax compliance | property tax | tax incentives | fiscal policy | aviation | gross domestic product (GDP) | Organisation for Economic Co-operation and Development (OECD) | environmental tax | Poland | tax breaks | tax reform | retail

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