Government grows pessimistic about decreasing personal income tax brackets

"Despite Poland needing a new tax system, we cannot radically decrease them due to the budget needs," said deputy Prime Minister and Economy Minister Janusz Steinhoff. New Finance Minister Jaroslaw Bauc must report on the effect of tax change proposals on the budget. It is possible to increase the planned budget deficit from 1.5% to 1.9-2.0%, but the current plan would require an additional zl. 2 billion - zl. 3 billion. "I will not be surprised if the budget would have to be fixed both in level of spending and revenues," said deputy president of Sejm Public Finances Commission. The proposed changes would include decreasing middle and high-income tax brackets from 29% and 36% in 2001 to 28% and 35% in 2002. The lowest 19% bracket would remain the same, but as of 2003 only two brackets of 18% and 28% would remain. Pro-family tax breaks would be introduced, but construction tax breaks, rent and health tax breaks would be terminated. In 2003 only 5% of capital gains would be exempted from taxes. Capital gains are currently tax free. (Rzeczpospolita, page B1) M.M.