3% VAT in agricultural sector proposed to offset shortfalls in tax reform

According to experts, in the next two years the budget will not make any profit from the tax reform as money earned through scrapped tax breaks will simply be offset by downgraded tax rates. According to the Finance Ministry, the situation may be improved by introducing a 3% VAT tax in the agriculture sector. The proposal will be debated today. The ministry expects the abolishment of most tax breaks to inject zl. 659 million into the budget. However, a reduction in tax rates will cost the budget zl. 915 million while a pro-family tax break will take another zl. 554 million. To remedy the situation, a 3% VAT tax in the agriculture sector will give the state zl. 600 million. "We are afraid the motion may not be carried in the Sejm today. If it isn't the budget will be in peril," said head of the Public Finance Commission Stanislaw Kracik of Freedom Union (UW). Still, according to Miroslaw Gronicki from the Social Economic Analysis Center (CASE), there is no reason to panic, as the cost of the reform constitutes only 1% of the a budget planned to reach zl. 140 billion in 2000. (Puls Biznesu, page 7) J.K.