We're in - but what do we do now?
Andrew Kinast is managing partner of Grant Thornton Poland
Now that Poland has safely voted for EU membership, the reality of how poorly prepared the country is starts to become apparent. Having spent the best part of two years convincing the electorate to vote in favor of the union, a weak and unpopular government faces the task of trying to kick-start the economy in order to achieve the growth rates necessary to stand any chance of catching up with the neighbors in the west. Now is really the last minute in which change can be effected.
The removal of Kołodko must be seen in a positive light, as the plethora of non-solutions which had been emanating from the Finance Ministry had long since become an embarrassment. It is too early to say whether the new man has much room left to maneuver, and clearly the flat-rate tax proposal is a non-starter for at least the next year. However, Poland needs to do something to make itself more tax competitive and to start collecting taxes on the earnings of the more successful businessmen, who at present are encouraged by the system to shelter income abroad. The Russian experience clearly demonstrated once again that reducing tax rates to a level where it is not worthwhile to put in place tax shelter schemes increases the overall amount of income tax collected.
We will have to wait and see as to how quickly the business liberalization proposals of Economy, Labor and Social Policy Minster Jerzy Hausner will be put to the parliamentary vote, but we can be certain that in the run-up to the vote of confidence earlier this month various interested parties were most probably bought off by promises of the removal of some of the more radical proposals from the reform program, which in turn would be unpopular with the electorate of the smaller parties on whom the minority government relies for support.
The most important issue will be how quickly Poland can implement the various systems necessary to be able to take at least some advantage of the EU accession funding available. We know that the computer systems are still not in place and, if the experience of ZUS's computerization is anything to go by, we may be in for a rough ride. Which brings me to a fundamental question. Apparently Poland has such unique cows and pigs that it is not possible to buy an off-the-shelf piece of software from another country to run the farm animal register. There are numerous other areas in which new software apparently needs to be written. We know who benefits from this, but why oh why is it allowed to happen in the first place? Surely the IT lobby in Brussels cannot be so strong that no commissioner is able to cut through the nonsense. Clearly not.
The last area is infrastructure. Successive Polish governments have failed to get the motorway building program moving, counting on the fact that German truck companies hauling goods to and from Russia will in the end get so fed up with changing shock absorbers every other week that they will persuade the Bundestag to build motorways in Poland. This would, of course, repeat history but this time for economic rather than military reasons. Still there may yet be a method to the madness. So as the Czechs complete a decent link between Poland and Austria (interestingly the motorway ends in a country track on the Austrian side of the border), we are still rattling around on a single-lane link between east and west.
We all live in hope.
