A weapon of mass destruction
So now we know. All remaining doubts have been removed. It is the intention of the Miller Administration to introduce a confiscatory tax regime. There is no other way to describe a system in which those who are set to be penalised at the proposed higher rate of personal income tax of 50% will spend half of every year working for the government.
The proposal, which Finance Minister Grzegorz Kołodko slipped into a television interview, is perfectly revealing of the thinking of the old party guard inside the SLD towards private enterprise, the market economy and entrepreneurship. They detest it. They hanker for the good old days when commissars decided the direction of the nation, controlled virtually all the economy and cowed the media. It is too late to reverse the reforms of the past 12 years which have placed seven out of 10 people in the private sector and permitted the generation of 85% of GDP by private enterprise. Unfortunately, the market economy's storming success represents a terrible temptation for the unreconstructed scions of the command economy: they cannot resist seizing that wealth created by domestic and foreign investors alike in order to manipulate the economy by wire.
Remember, this is not about the "redistribution of wealth," that mantra so often uttered by governments of a socialist persuasion. Not one złoty of revenues presently extracted from taxpayers is redistributed to schools, hospitals, welfare services, road construction or getting Poland to look like a modern European state. It is all wasted in propping up woebegone state companies, employing a million useless paper chasers who suffocate the economy, and servicing the groaning burden of national debt.
The taxation policies of the administration have become the most wickedly punitive in the Europe Poland aspires to join. But for the judgments of the Constitutional Court, the prospect would be infinitely worse. When he speaks of growth in the economy, what Mr. Kołodko really means is, come on in, and we will rip you off. Extraordinarily, the prime minister and his liegemen at finance and the treasury (the trio of Miller, Kołodko and Kaczmarek are the de facto government of this nation) believe that foreign investors will do just that, and also that established entrepreneurs will queue up to surrender half their hard-earned wealth to the government to throw away.
Neither will happen. Prospective investors, who have already become nervous over the government's fiscal climate, will switch their attention to other countries where they will get a warmer welcome. And the more confiscatory the tax regime becomes, the more the potential victims will evade the penalties, legally or otherwise. Higher taxes will swell the ranks of the unemployed, stifle entrepreneurship, deter investment; all that when there is not one single example of a successful high tax economy in the entire history of commerce. Poland will not be breaking the mould, for sure.
It is extraordinary that almost next door, Putin's Russia, whatever its manifold other faults may be, has fully grasped the implications of the damage a weapon of mass destruction such as penal taxation can inflict upon an economy. The Russian federal government has gone for low range flat taxes in the corporate and personal sectors (13%) and witnessed as a consequence a soaring 70% increase in revenue collection.
It is not only the headline taxes which threaten the national economy. It's the sly ones the government sneaks through on the side, such as increases in health and social security contributions, and the infamous vignette, which the hapless Marek Pol at the Ministry of Infrastructure has been compelled to introduce. If ever there was a testament to economic illiteracy, it is this one, a perfect illustration of make-do and muddle which, unfortunately, has been a characteristic of all governments since 1989. Here we are with barely a kilometre of decent highway, and because the government is too improvident (and incompetent) to build new roads or maintain the existing ones properly, drivers and haulage firms are going to be punished for it.
Road pricing on this scale has never been attempted before, anywhere. There are systems of hypothecation to service transport infrastructure at work in various countries, of course. The so-called "pfennig tax" on fuel in Germany is a good example. But countries which raise such revenues in the form of a levy already have splendid roads, trains and city transport, and use the money they pull in to make them better. So private and commercial drivers are buying efficiency, safety and productivity.
The vignette is another direct attack on private enterprise because haulage companies, which are the principal target, will pass on the extra costs direct to their customers, who in turn will seek to make the necessary offset savings by reducing investments and sacking workers.This is known as concealed direct taxation. It's the sort of thing South American countries have perfected to a fine art.
Those whom the Gods would destroy, they first make mad.
The proposal, which Finance Minister Grzegorz Kołodko slipped into a television interview, is perfectly revealing of the thinking of the old party guard inside the SLD towards private enterprise, the market economy and entrepreneurship. They detest it. They hanker for the good old days when commissars decided the direction of the nation, controlled virtually all the economy and cowed the media. It is too late to reverse the reforms of the past 12 years which have placed seven out of 10 people in the private sector and permitted the generation of 85% of GDP by private enterprise. Unfortunately, the market economy's storming success represents a terrible temptation for the unreconstructed scions of the command economy: they cannot resist seizing that wealth created by domestic and foreign investors alike in order to manipulate the economy by wire.
Remember, this is not about the "redistribution of wealth," that mantra so often uttered by governments of a socialist persuasion. Not one złoty of revenues presently extracted from taxpayers is redistributed to schools, hospitals, welfare services, road construction or getting Poland to look like a modern European state. It is all wasted in propping up woebegone state companies, employing a million useless paper chasers who suffocate the economy, and servicing the groaning burden of national debt.
The taxation policies of the administration have become the most wickedly punitive in the Europe Poland aspires to join. But for the judgments of the Constitutional Court, the prospect would be infinitely worse. When he speaks of growth in the economy, what Mr. Kołodko really means is, come on in, and we will rip you off. Extraordinarily, the prime minister and his liegemen at finance and the treasury (the trio of Miller, Kołodko and Kaczmarek are the de facto government of this nation) believe that foreign investors will do just that, and also that established entrepreneurs will queue up to surrender half their hard-earned wealth to the government to throw away.
Neither will happen. Prospective investors, who have already become nervous over the government's fiscal climate, will switch their attention to other countries where they will get a warmer welcome. And the more confiscatory the tax regime becomes, the more the potential victims will evade the penalties, legally or otherwise. Higher taxes will swell the ranks of the unemployed, stifle entrepreneurship, deter investment; all that when there is not one single example of a successful high tax economy in the entire history of commerce. Poland will not be breaking the mould, for sure.
It is extraordinary that almost next door, Putin's Russia, whatever its manifold other faults may be, has fully grasped the implications of the damage a weapon of mass destruction such as penal taxation can inflict upon an economy. The Russian federal government has gone for low range flat taxes in the corporate and personal sectors (13%) and witnessed as a consequence a soaring 70% increase in revenue collection.
It is not only the headline taxes which threaten the national economy. It's the sly ones the government sneaks through on the side, such as increases in health and social security contributions, and the infamous vignette, which the hapless Marek Pol at the Ministry of Infrastructure has been compelled to introduce. If ever there was a testament to economic illiteracy, it is this one, a perfect illustration of make-do and muddle which, unfortunately, has been a characteristic of all governments since 1989. Here we are with barely a kilometre of decent highway, and because the government is too improvident (and incompetent) to build new roads or maintain the existing ones properly, drivers and haulage firms are going to be punished for it.
Road pricing on this scale has never been attempted before, anywhere. There are systems of hypothecation to service transport infrastructure at work in various countries, of course. The so-called "pfennig tax" on fuel in Germany is a good example. But countries which raise such revenues in the form of a levy already have splendid roads, trains and city transport, and use the money they pull in to make them better. So private and commercial drivers are buying efficiency, safety and productivity.
The vignette is another direct attack on private enterprise because haulage companies, which are the principal target, will pass on the extra costs direct to their customers, who in turn will seek to make the necessary offset savings by reducing investments and sacking workers.This is known as concealed direct taxation. It's the sort of thing South American countries have perfected to a fine art.
Those whom the Gods would destroy, they first make mad.
