New six-level tax scale approved
This prorgressive approach to taxes, often referred to as the Robin Hood approach, is bad news for business, said Witold Michalek, Business Centre Club director.
The bill will discourage private-sector development and increase overhead costs to keep higher-skilled workers, Michalek said.
"These people will demand higher wages when they see they will have to pay higher taxes," he said.
The bill, which received overwhelming Sejm support (221-79) on Friday, Oct.13, is unlikely to face significant opposition in the Senate or by the president and is scheduled to go into effect Jan. 1.
Michalek said changing the tax system with three months notice disrupts the ability of businesses to plan ahead. This destabilizing effect would make those who considered entering the private sector now think twice. Michalek said he knew about the proposal this summer but "nobody took it seriously."
Jacek Bajson, Ernst & Young personal tax manager, said that while Poles generally are used to swiftly changing tax currents, the current proposal would more likely discourage foreign business.
The proposed income tax scale would create six categories from the present three and effectively lower the rate from 21% to 19% for those earning annually up to zl. 4,300 ($1,755).
But the bill raises income tax payments for those with upper middle incomes. For example those with annual incomes from zl. 18,000 ($7,347) to zl. 24,000 ($9,746) would have to pay a 38% tax rate as opposed to the present 31% rate. Under the bill, incomes greater than zl. 24,000 ($9,766) pay the 45% rate, which is relatively unchanged from the current 45% rate for yearly incomes greater than zl. 24,800 ($10,122). The average national annual wage was zl. 6,480 ($2,645) as of June 30, according to the Central Statistical Office. In Warsaw in August, the average annual wage was zl. 10,848 ($4,428).
Prime Minister Jozef Oleksy said the new tax scale was in line with his policy of lowering the burden on the most needy.
"There are large areas of poverty in Poland," Oleksy told deputies before the vote last week. "The current rates have not distributed tax burdens equitably."
Finance Minister Grzegorz Kolodko said he would prefer the taxes to stay at current levels because the new rates were likely to discourage people from saving. But he said he was willing to accept the proposal because it would not affect next year's budget revenues.
"The new rates would mean slightly higher income for more than 80% of the people and a heavier tax burden for the rest," Kolodko said.
Center-right opposition parties rallied against the proposal.
"The new taxes hit the most active in society N managers and specialists N but also hardworking people like miners and steel workers," said Andrzej Wielowieyski, deputy from the Freedom Union. The Parliament accepted a provision allowing taxpayers to claim back up to zl. 700 ($286) a year against medical bills incurred for private medical treatment.
The bill will discourage private-sector development and increase overhead costs to keep higher-skilled workers, Michalek said.
"These people will demand higher wages when they see they will have to pay higher taxes," he said.
The bill, which received overwhelming Sejm support (221-79) on Friday, Oct.13, is unlikely to face significant opposition in the Senate or by the president and is scheduled to go into effect Jan. 1.
Michalek said changing the tax system with three months notice disrupts the ability of businesses to plan ahead. This destabilizing effect would make those who considered entering the private sector now think twice. Michalek said he knew about the proposal this summer but "nobody took it seriously."
Jacek Bajson, Ernst & Young personal tax manager, said that while Poles generally are used to swiftly changing tax currents, the current proposal would more likely discourage foreign business.
The proposed income tax scale would create six categories from the present three and effectively lower the rate from 21% to 19% for those earning annually up to zl. 4,300 ($1,755).
But the bill raises income tax payments for those with upper middle incomes. For example those with annual incomes from zl. 18,000 ($7,347) to zl. 24,000 ($9,746) would have to pay a 38% tax rate as opposed to the present 31% rate. Under the bill, incomes greater than zl. 24,000 ($9,766) pay the 45% rate, which is relatively unchanged from the current 45% rate for yearly incomes greater than zl. 24,800 ($10,122). The average national annual wage was zl. 6,480 ($2,645) as of June 30, according to the Central Statistical Office. In Warsaw in August, the average annual wage was zl. 10,848 ($4,428).
Prime Minister Jozef Oleksy said the new tax scale was in line with his policy of lowering the burden on the most needy.
"There are large areas of poverty in Poland," Oleksy told deputies before the vote last week. "The current rates have not distributed tax burdens equitably."
Finance Minister Grzegorz Kolodko said he would prefer the taxes to stay at current levels because the new rates were likely to discourage people from saving. But he said he was willing to accept the proposal because it would not affect next year's budget revenues.
"The new rates would mean slightly higher income for more than 80% of the people and a heavier tax burden for the rest," Kolodko said.
Center-right opposition parties rallied against the proposal.
"The new taxes hit the most active in society N managers and specialists N but also hardworking people like miners and steel workers," said Andrzej Wielowieyski, deputy from the Freedom Union. The Parliament accepted a provision allowing taxpayers to claim back up to zl. 700 ($286) a year against medical bills incurred for private medical treatment.
