Court deep-sixes tax bill
On Dec. 28, the tribunal held that the proposed system scheduled to take effect in 1996 was illegal because it did not give taxpayers enough time to adjust to the new rules.
The tax rates were increased to 21%, 33% and 45% in 1994. Under a bill approved by Parliament, the rates would have changed to a six-level system. The thinking behind the proposal was to shift the tax burden to the middle classes while lifting some of the burden from the lower classes.
(See WBJ, Dec. 8-14, 1995)
But local accountants say the proposed change would only have created a logistical nightmare.
"It would be very complicated to change the tax," said Katarzyna Zochowska, assistant tax manager with KPMG Polska. She noted that under the six-tier system, the differences between the rates were very small. The new rates would have been 19%, 21%, 24%, 31%, 38% and 45%. Those earning more than zl. 24,800 ($10,300) would have fallen into the same 45% bracket as currently.
"If you earn lots of money, probably (the proposal) does not make lots of difference," said Inarda Bielinska, tax manager with Deloitte & Touche.
The government presented the bill to the Sejm in July. After legislative approval, former President Lech Walesa vetoed the bill in mid-October. After Parliament overrode his veto in early December, Walesa went to the Constitutional Court arguing that the bill was illegal because of the short timetable, which undermined the state's trustworthiness. His representative also argued that the bill was unfair because it introduced tax breaks for costs related to private medical care but did not contain tax breaks for charitable donations. (Currently, there is a tax break for gifts made to charitable organizations and to relatives and close friends.) The court declined to rule on the latter argument.
Representatives from the Finance Ministry told the Polish press that the decision would not have any impact on the 1996 central budget.
The tax rates were increased to 21%, 33% and 45% in 1994. Under a bill approved by Parliament, the rates would have changed to a six-level system. The thinking behind the proposal was to shift the tax burden to the middle classes while lifting some of the burden from the lower classes.
(See WBJ, Dec. 8-14, 1995)
But local accountants say the proposed change would only have created a logistical nightmare.
"It would be very complicated to change the tax," said Katarzyna Zochowska, assistant tax manager with KPMG Polska. She noted that under the six-tier system, the differences between the rates were very small. The new rates would have been 19%, 21%, 24%, 31%, 38% and 45%. Those earning more than zl. 24,800 ($10,300) would have fallen into the same 45% bracket as currently.
"If you earn lots of money, probably (the proposal) does not make lots of difference," said Inarda Bielinska, tax manager with Deloitte & Touche.
The government presented the bill to the Sejm in July. After legislative approval, former President Lech Walesa vetoed the bill in mid-October. After Parliament overrode his veto in early December, Walesa went to the Constitutional Court arguing that the bill was illegal because of the short timetable, which undermined the state's trustworthiness. His representative also argued that the bill was unfair because it introduced tax breaks for costs related to private medical care but did not contain tax breaks for charitable donations. (Currently, there is a tax break for gifts made to charitable organizations and to relatives and close friends.) The court declined to rule on the latter argument.
Representatives from the Finance Ministry told the Polish press that the decision would not have any impact on the 1996 central budget.
