Broken promise?

Instead of introducing its long-touted new VAT law, Poland's Civic Platform (PO) led government says it now plans to implement an amendment to the current VAT law.

The amendment was prepared by the Polish Confederation of Private Employers (PKPP) Lewiatan three years ago and taken up by the Law and Justice (PiS) party, then head of the government's ruling coalition. It was debated by the previous Sejm, but never came to a vote.

The move marks a turnaround in policy for PO. During the previous Sejm, the then-opposition party was clear in its message that Poland needed a brand new VAT act, not another amendment.

"Above all it's worth deciding whether to update this [VAT act] for the umpteenth time or, as we tried, approach the project right from the beginning," Zbigniew Chlebowski, an economist, former deputy president of the Sejm's Financial Committee and current head of PO's Parliamentary Club, told Radio TOK FM in January 2006.

The amendment project PO is now pushing will implement two significant changes: the abolishment of both the 30-percent penalty on unpaid VAT and the deposit on VAT paid by new companies. It will also implement new rules for paying VAT on imports, doing away with the need to pay cash directly to customs on arrival. The amendment does not change VAT rates themselves.

PO's previous VAT legislation project called for the implementation of a flat 15-percent VAT rate. The ultimate fate of that legislation, as well as that of the flat VAT - one of PO's campaign promises - is uncertain at this point.

Nevertheless, the amendment project is unlikely to pass through the Sejm in the form in which PiS left it.