Ministry of Finance prepares new solutions for local governments

The calculations of the Ministry of Finance show that tax changes introduced by the Polish Government will cost local governments about PLN 150 billion over 10 years. Work is underway on legislative solutions to compensate for these losses. The proposed changes are a guarantee of income and a development subsidy for investment-active municipalities. As a result, the revenues of local government units (LGUs) are to be approx. 10 percent higher than forecast.

“We are preparing certain legislative solutions in this area, which will be based on two pillars. The first pillar – legal solutions that in fact will guarantee local government units not less, from year to year, shares in income taxes. So the income from this will not decrease. The second pillar will be the introduction of a new part of the general subsidy, the so-called development subsidy, which will be calculated depending, for example, on the number of inhabitants, but also on the investment activity of local government units,” Sebastian Skuza, Deputy Minister of Finance, said.

A mechanism supporting local governments is also to be the Strategic Investments Program, which will offer non-returnable co-financing of local government investments, which is to increase their scale. This year, local governments will also receive PLN 8 billion (shared with an algorithm), which is the result of a good budget situation. The ministry will also introduce transitional solutions that will give LGUs greater flexibility in budget management as a result of changes in fiscal rules and will increase the debt repayment limit of LGUs and introduce solutions supporting the use of EU funds.

(Newseria)