Balcerowicz claims that new tax on interest may limit scope for rate cuts

National Bank of Poland (NBP) governor Leszek Balcerowicz has suggested that a 20% tax on interest on savings, approved by the Sejm yesterday, limits the scope for interest rate cuts. Asked if the tax, which the central bank says could hurt savings rates, reduced the scope for rate cuts, Balcerowicz told Reuters, "If you compare it with a situation where there is no such tax, the scope for rate cuts is smaller." He also said the tax would not help Poland' s weak economic growth. "This is not favorable from the point of view of sav ings, and savings are what monetary policy makers look at," he said. The new tax has yet to be approved by the Senate and signed by President Aleksander Kwasniewski. Finance Minister Marek Belka, who hopes a series of new tax mea sures will bring some $1 billion in additional budget revenues, has in the p ast rejected as unfounded concern that the 20% tax on interest would hurt sa vings. Despite Balcerowicz's criticism of the new tax, the Monetary Policy C ouncil (RPP), which he heads, is expected to cut rates at least once more th is year as inflation heads toward 4%. (Reuters)