December 7, 2021

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The Polish system, taxes and inflation.  The benefits of the new free amount will disappear quickly

The Polish system, taxes and inflation. The benefits of the new free amount will disappear quickly

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Despite numerous protests, massive and complex tax reform was adopted at a frank pace, and the government explained the pace of work with benefits to the vast majority of Poles, mainly due to the increase in the tax-exempt amount to 30,000 PLN. PLN and the second tax limit increased from PLN 85528 ​​to PLN 120 thousand. zloty. However, at the same time, the Polish system eliminates the possibility of deducting health insurance fees from taxes, which translates into a significant increase in this tax.

The situation is that after many years of freezing (the second threshold has not been changed since 2008, and in the case of the exempt amount there was only a small adjustment for the lowest income earners), these two parameters will finally be raised, but the government did not plan to automatically compare or the amount exempted from Taxes, nor second frets.

And with rising inflation, this will mean that the effect of the Polish deal, which is most exposed and praised by the government, will be quickly “gobbled up”, because we will already pay higher and higher taxes.

– Free amount increased to 30,000 after many years. PLN, but the absence of an indicator mechanism in the law means that with rising inflation and wage growth, the real free amount will fall rapidly and it may turn out that this effect will be “used up” in just a few years. Similar to the second tax threshold freeze from 2008, which means we paid more and more taxes on lower real incomes – says Interia, the professor. Adam Marinsky, Chairman of the National Council of Tax Advisers.

Łukasz Kozłowski, chief economist at the Polish Businessmen’s Confederation, also points out the negative effects of not assessing the amounts that determine the taxes we pay in real terms.

– In the present situation, the benefits of the Polish order will expire faster than under normal conditions, because what is a “cost” to the taxpayer, that is, the higher health contribution, which can no longer be deducted, will increase with the increase in wages, while what is a benefit and what was It is supposed to “dissolve” the Polish system and make the net effect positive, i.e. the higher amount that is exempt from tax, will not change with the increase in prices and wages – says Łukasz Kozłowski, chief economist from the Polish Entrepreneurs’ Union.

With higher inflation and higher nominal profits, it will be easier to find income above the threshold of 6000. PLN, where the effect of interest and losses from the Polish deal will be zero and it will also be easier to fall into the loss of the group in the reform.

The law only states that the Minister of Finance may submit to the Cabinet a proposal to increase the amount of the exemption in the event of a significant increase in the subsistence minimum, but Łukasz Kozłowski points out that not only is there no automatic indexing, but also that the exempted amount can be changed at all, Where livelihoods must triple.

– Not valuing both amounts, for example on the basis of price increases, means that we will deal with a cold tax advance, that is, the actual tax rates will increase – adds Kozovsky.

Trade unions, among others, have assumed automatic evaluation. OPZZ demanded a transparent formula for the valuation of the free amount, but in the end there is no such mechanism in the law.

Monica Krzyniak Sajevic

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