European Union VAT increases to make the Treasury richer by zl. 1.5 bln

On Friday the Finance Ministry announced planned value-added tax (VAT) changes to comply with European Union (EU) law. VAT on some articles and services, such as construction materials and children's accessories, is to increase from 7% to 22%, the highest bracket. The construction industry fears the changes coupled with the planned scrapping of the building tax deduction will cause a recession in the housing market. However, deputy finance minister Jan Rudowski, said the increases would be implemented gradually by 5% every year until they reached the required rate in 2003. The Ministry also plans to lower the income threshold for VAT subjects from euro 20,000 to euro 10,000, increasing the number of taxpayers from 450,000 to 550,000. The changes are estimated to raise an additional zl. 1.5 billion in government revenue. VAT on unprocessed agricultural products is to come into effect at the beginning of September. (Gazeta Wyborcza, June 3-4, page 33, Rzeczpospolita, June 3-4, page B1) P.S.