Poland considers increased tax burden for rich

Finance Minister Marek Belka wants to shift some of the tax burden from low wage earners to the highest starting in 2003 to calm social tensions, which are growing along with unemployment. A proposed increase in the tax-free threshold on personal income would kick in before Poland, the largest of 10 candidates to join the European Union, holds a membership referendum ahead of possible accession in 2004. The poor are more skeptical about joining the EU in Poland than the population as a whole, and, with unemployment at 18% and rising, the left-wing government is concerned that they may turn the referendum into a protest vote.

"In a situation where there is a danger of social unrest, we have to respond (by) shifting the tax burden to the better off," Belka told a news briefing early last week. Separately, the cabinet approved a package of measures to simplify tax regulations on small firms as part of its economic recovery strategy to pull Poland out of its worst economic slowdown in a decade. Belka said that details of the proposed personal tax changes had not yet been finalized but the plan would be neutral for budget revenues. One draft envisages expanding a zero-percent tax bracket for the lowest wage earners and cutting thresholds in the current three-tier system of 19%, 30% and 40% tax rates, thereby increasing the burden on top earners. Poland's top rate applies to annual income over $18,200 - roughly three times the average wage of $6,760. Belka said some kind of compensation scheme for the better-off linked to savings was under consideration. - Reuters