The truth is out
The last week in Polish politics has been one of the most exciting and instructive of the last two years. The spectacle of the coalition's titanic struggle to push through Parliament its radical tax reform legislation allowed observers to see at first hand the minute-by-minute maneuverings of both government and opposition in exploiting procedural loopholes within Parliament to respectively force through or try to sabotage the reform that the economy needs to take it into the 21st century. However, although the parliamentary hurdle has been cleared, uncertainty remains over the behavior of President Aleksander Kwasniewski, who must sign the laws by Nov. 30 for them to take effect next year.
That will keep the tension going for another fortnight. But the last couple of weeks have been tremendously instructive for those wanting to understand what really lies behind political party rhetoric. Take first of all the coalition, especially Solidarity Election Action (AWS). To be sure, the fact that the coalition had failed to move forward on its tax legislation until late in the day, leaving it with a massive scramble to get the laws through Parliament in time, was the fault of many coalition MPs who wanted to demonstrate independence from Finance Minister Leszek Balcerowicz. That is true not only of AWS parliamentarians, but also Freedom Union (UW) MPs, many of whom resent Balcerowicz's authoritarianism and center policies.
But the truth is that when the chips were down, an agreement was reached between AWS leader Marian Krzaklewski and Balcerowicz on the shape of the reform, and both parties moved quickly to get the reform through Parliament. Bear in mind that this reform is radical, removing many of the allowances that have distorted the Polish tax system in the past, lowering tax rates over two years, and cutting out the top threshold of tax altogether after three. It's a piece of legislation that reflects the new consensus already established in the West under former U.K. Prime Minister Margaret Thatcher and ex-U.S. president Ronald Reagan that simpler, lower taxes mean higher growth and more jobs. In Poland, that reform is all the more necessary given the upcoming slowdown of the Polish economy, which needs a significant improvement in efficiency if it is to keep up future growth.
And what of the post-communist Democratic Left Alliance (SLD), so beloved by Western diplomats and analysts as the only force for sound policy? The last two weeks have shown that the darlings of Western investors care not a fig for reforming this crucial aspect of the economy. The spectacle of SLD MPs cynically abusing parliamentary procedure - first by staging walkouts, then by flooding the parliamentary Finance Committee with inane amendments to the proposed legislation revealed that their only priority lies in destroying Prime Minister Jerzy Buzek's government and opening the door to new elections that current polls show they would win by a landslide. The fact that as a result Poland would lose another year without the tax reform it so desperately needs for the good of its economy and people means nothing to them.
Of course, say their supporters, the SLD are just cynics who would continue the reform anyway out of necessity if ever they came to power. But the events of last week make that doubtful. Anyone listening to the statements of the SLD leadership would have only heard a torrent of abuse heaped on Balcerowicz and the government, liberally laced with the sort of left-wing demagoguery that even Britain's Tony Benn would have been proud of. Listeners were transported back to the rhetoric of 1960s and 1970s Western leftists as they heard SLD leaders, from top to bottom, playing the populist card of redistributionist tax policy, talking nonsense about the "widening gap between rich and poor," and squeezing the rich until the pips squeaked. Anyone who believes the SLD would liberalize and lower personal and corporate taxation, were they to be in government, after a dose of last week's bile needs their head examined.
Now the focus shifts to Kwasniewski. Until last week, many SLD politicians and probably Kwasniewski himself never believed that the tax bills would get this far, the government either having collapsed or the bills stalled in Parliament. In those circumstances Kwasniewski could afford to remain non-committal about whether he would sign the bills into law at all. But that will no longer be possible. Already, the SLD whose full support he needs in next year's presidential elections is pressing him to veto the legislation on the grounds that it is badly drafted. Yet Kwasniewski has also invested much capital in courting Balcerowicz, hoping to drag the UW into a future coalition with the SLD. Now that support and resistance to the bills has become so politically polarized, whatever decision he makes will damage him. Perhaps as never before, Kwasniewski will be forced to show his true political colors. By the beginning of December, the truth will be out.
Marek Matraszek is the Warsaw director of CEC Government Relations. He can be e-mailed at director@cec.com.pl
