Negotiations with European Union on tax policy to close in first half of 2001

Poland and the European Union are close to reaching an agreement on tax policy, meaning that this chapter of negotiations will likely be closed in the first half of 2001. The main issues on which the two sides still cannot agree include taxes on books, fuels and tobacco. Poland would like to keep a 0% VAT on books to promote readership, but will likely accede to the EU proposal of a 2%-3% tax. The EU meanwhile could perhaps assent to the Polish demand of maintaining a lower excise tax rate on fuels made from recycled car oil as well as petrol with an added spirit component. The issue of excise on cigarettes is perhaps the most difficult one, since the EU is demanding that Poland raise its tax to the EU level of 57% of the retail price in order to prevent a flood of cheap cigarettes to its markets. Polish negotiators fear that such an excise level could result in a complete market breakdown. (Puls Biznesu, p.11) T.J.