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Finance ministry plans to raise tax-free threshold to 30,000 PLN

TVN24 | TVN24 News in English

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gf
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TVN24 News in English, PAP
Finance Minister Tadeusz Kościński announces planned changes in taxingTVN24
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TVN24Finance Minister Tadeusz Kościński announces planned changes in taxing

Poland's Finance Minister Tadeusz Kościński informed that a draft tax law, a part of the Polish Deal package, has been prepared. He pointed out the changes would be either beneficial or neutral to 90 percent of taxpayers, some 23 million people. He added that 9 million people would be exempted from personal income tax, which in turn would allow them to keep 8 billion zlotys in their pockets. The project assumes, among other things, tax-free income threshold raised up to 30,000 zlotys annually.

Tax changes - Polish Deal

"We've prepared a tax package for the Polish Deal, it's a result of many months of work, today we begin social consultations," Finance Minister Tadeusz Kościński said.

"Our project assumes raising the tax-free income threshold up to 30,000 zlotys, and the tax base up to 120,000 zlotys. Starting next year, we propose business-owners to pay the same health insurance contribution as employees. The option to deduct health care contribution from the overall tax fee would be replaced with other solutions. Here we have for example, the Estonian CIT, further lowered lump-sum payments, innovation relief, for foreign expansion or development," the minister said.

Minister Kościński said at a press conference on Monday, "changes in the tax wedge will leave additional 8 billion zlotys in the taxpayers' pockets, while according to finance ministry estimates, the overall cost of changes to the tax law will amount to approximately 20 billion zlotys". "We should see this as an investment that will allow our economy to grow very fast after the pandemic has ended," he added.

As the minister explained, the Polish Deal was a tax "fair play" to the state. "We want to new schools to be build, new hospitals, so we can all fell safe, and so in the Polish Deal we propose honest payments of taxes and contributions," he said.

Finance minister on Polish debt

Kościński also informed that the country's finances were in very good condition, adding that government action taken during the pandemic helped to save plenty jobs. He mentioned that Poland's recession level last year was at 2.7 percent, whereas the EU average was "more than twice as high". He also stressed that last year Poland had one of the lowest unemployment rate in the EU.

"A lot is being said about public debt, debt of state institutions and local governments," the minister said, adding that according to the Eurostat, at the end of the Q1 of 2021 "Poland's debt equalled 59% of the economy, and when you look at the average debt in the EU, it's at the level of 92%. The overall debt of the European states exceeds 100%," Kościński said.

Details of tax changes of the Polish Deal

Deputy Finance Minister Jan Sarnowski said that the tax reform will consists of three packages. "The first package is the most important one, as it will shift the tax system towards more fairness. First and foremost, it will include a significant, historic and unprecedented raising of tax-free threshold, but also changes relating to health insurance, raising the upper tax rate threshold by 40 percent, as well as changes in the simplified accounting," he said.

According to Sarnowski, the government plans to cover 6 out of 8 billion zlotys, that the tax reform under the Polish Deal is to cost, by tightening the tax system. He added that the tightening was one of the three main packages of the whole reform. It is to target two spheres - tackling the black economy and floating the money off to tax havens.

Two other packages - as Sarnowski explained - are meant to shift the whole tax system "towards more fairness", including changes to health insurance contributions, as well as a "tax reboot of the economy", namely a complete bundle of reliefs and incentives.

Polish Deal - key points

The Polish Deal is a new socio-economic programme put forward by the ruling United Right coalition for the post-pandemic period. Its fundamental assumptions include 7% of the GDP earmarked for health care, lowering taxes for 18 million Poles (including raising tax-free threshold up to 30,000 zlotys and tax rate threshold from 85,500 zlotys up to 120,000), investments that are to generate 500,000 new jobs, mortgages without own contribution, houses up to 70m2 with no formalities, as well as tax-free pensions up to 2,500 zlotys.

Autor:gf

Źródło: TVN24 News in English, PAP

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