Dioclese sword of VAT hangs over the future of road construction

Due to the planned VAT increase on construction services from 2004, the Roads and Highways Authority (GDDKiA) will be obliged to increase the value of their contracts to contractors by roughly zł. 673 million, which is almost one third of the total amount designated for construction and m aintenance of roads in the 2003 budget. From next year, the VAT rate will increase from 7% to 22% and the 0% preferential rate for investments f inanced from non-refundable grants will be scrapped. According to some estimates, if the planned expenditures on roads will not increase in c omparison to the 2003 figures, then the authority would simply have no financial means for any investments. The tax increase will also threaten the existence of some construction companies, which will be forced to cover the VAT increase from their remuneration, as in most cases contracts cannot be renegotiated. (Gazeta Wyborcza, p. 23) M.M.