Red Tape Hot Box the power of the taxman
"When the tax is arbitrary, every person subject to the tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself,"
- remarked Adam Smith in 1776.
In Poland, the brutal tax reality seems to confirm the words of the British thinker and economist. The tax clerks are ruthless in chasing the businesses they think have tried to evade taxes in one way or another. Although the accusations are often groundless, some firms prefer to offer bribes straight away because they know that cases can often drag on for months before a final decision is made. But most businesses try to fight for their rights in court, which is often a tiring and nerve-wracking process.
The tax clerks get the green light from every new finance minister who repeats that "better gathering of taxes" is needed, which makes them bold in harassing entrepreneurs. They have already learned that the big firms are hard to pin down as they are defended by effective lawyers who know all the loopholes in the law. Which means that the most frequent victims are small and medium sized businesses. As they don't have enough money to employ lawyers, they are at the mercy of the tax clerks. The Tax Office tells the accused entrepreneurs that they are obliged to accrue outstanding payments even though they haven't yet been found guilty by the Treasury Court (Court of the Second Instance). Yet before the case is even heard, the amount outstanding plus interest can easily reach as much as several hundred thousand złoty. By this stage, the fiscal department doesn't want to give up that kind of money, so it tries to pick holes in absolutely anything that seems unclear to them. The case can then drag on for months before a final decision is arrived at. Large corporations are able to freeze their money for this time before a positive verdict is reached. Unfortunately, most firms in Poland aren't able to do that and thus go bankrupt...
The reason for the clerks' lawlessness is that they aren't responsible for their mistakes. They are simply prosecutors who bring charges against their chosen prey. They get high commissions for finding tax-evasion suspects. There is no risk for them because their decisions can be annulled by the Treasury Court. Those business which have suffered financially and lost credibility among their clients can later claim compensation from the National Treasury, and rightly so. Except that the money they get is in truth our money, that of the taxpayers who, as usual, have to suffer for the incompetence of our bureaucracy.
- remarked Adam Smith in 1776.
In Poland, the brutal tax reality seems to confirm the words of the British thinker and economist. The tax clerks are ruthless in chasing the businesses they think have tried to evade taxes in one way or another. Although the accusations are often groundless, some firms prefer to offer bribes straight away because they know that cases can often drag on for months before a final decision is made. But most businesses try to fight for their rights in court, which is often a tiring and nerve-wracking process.
The tax clerks get the green light from every new finance minister who repeats that "better gathering of taxes" is needed, which makes them bold in harassing entrepreneurs. They have already learned that the big firms are hard to pin down as they are defended by effective lawyers who know all the loopholes in the law. Which means that the most frequent victims are small and medium sized businesses. As they don't have enough money to employ lawyers, they are at the mercy of the tax clerks. The Tax Office tells the accused entrepreneurs that they are obliged to accrue outstanding payments even though they haven't yet been found guilty by the Treasury Court (Court of the Second Instance). Yet before the case is even heard, the amount outstanding plus interest can easily reach as much as several hundred thousand złoty. By this stage, the fiscal department doesn't want to give up that kind of money, so it tries to pick holes in absolutely anything that seems unclear to them. The case can then drag on for months before a final decision is arrived at. Large corporations are able to freeze their money for this time before a positive verdict is reached. Unfortunately, most firms in Poland aren't able to do that and thus go bankrupt...
The reason for the clerks' lawlessness is that they aren't responsible for their mistakes. They are simply prosecutors who bring charges against their chosen prey. They get high commissions for finding tax-evasion suspects. There is no risk for them because their decisions can be annulled by the Treasury Court. Those business which have suffered financially and lost credibility among their clients can later claim compensation from the National Treasury, and rightly so. Except that the money they get is in truth our money, that of the taxpayers who, as usual, have to suffer for the incompetence of our bureaucracy.
