Sejm passes long-awaited tax bill
After a week of filibustering by opposition Democratic Left Alliance (SLD) deputies, the Sejm last week finally managed to pass the tax reform bill.
On Thursday, 231 deputies out of the Sejm's total 460 members voted in favor and 182 against the bill, which would significantly lower both corporate and individual income taxes over a two-to-four year period. Senate members were expected to vote on the tax proposal as early as last Sunday. The government has until Nov. 30 to pass the bill and have President Aleksander Kwasniewski sign it into law, as any changes to fiscal policy for the year 2000 must be made a month beforehand.
"We have just taken another step on the road toward a better tax system, which is simpler, limits the gray economy and helps to create new jobs," Finance Minister Leszek Balcerowicz said after the Sejm's vote last week.
The tax bill has not had an easy time of it. Ruling coalition partners Solidarity Election Action (AWS) and Freedom Union (UW) got into a brawl over the substance of the bill earlier this fall, a conflict that almost caused Balcerowicz to resign. Then, after assuming the bill would easily pass the Sejm's Finance Committee, AWS and UW officials were baffled to learn that the draft proposal had not moved out of the committee because several of the two parties' deputies had failed to show up for the vote.
In the last week, endless motions by SLD to block the proposal delayed voting in the Sejm. AWS and UW finally stymied those proposals and managed to pass the bill last week. By blocking the proposal, SLD deputies could have potentially dissolved the Parliament because the budget bill, of which the tax proposal is a component, would not have been passed on time.
Assuming the Senate does not try to add amendments to the bill, the issue could go before Kwasniewski as early as next week.
The bill brings down personal income tax rates to 36% from 40% for those with an annual income of more than zl. 65,292; and to 29% from 30% for incomes greater than zl. 32,646. The lowest personal income tax rate of 19%, for incomes under zl. 32,646 remains unchanged.
In 2001, personal taxes will undergo further cuts to 35%, 28% and 19%, respectively. By 2002, personal income taxes will fall under a two-tier structure of 18% and 28%.
The bill also calls for corporate taxes to drop to 30% by 2000 from the current 34%. That rate will notch down a further two percentage points annually, to reach 22% in 2004.
