Communication 14/2017: Extension of preferential social security contributions does not provide a system solution
Synthesis
Full communication aviliable in Polish.
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The Ministry of Family, Labor and Social Policy has proposed to extend the period of reduced social security (ZUS) contributions for newly self-employed (two years at present). The authors of the proposal believe that it will prevent shutting down activities when this entitlement is over. However, it may fail to do so, as some of these businesses are created solely to benefit from the reduced rate of contributions.
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The real problem is high taxation of low-income people - not only of those running their businesses but also of contract workers.
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The solution that one should aim at is such a reform of taxes and social security contributions that would reduce the taxation of all on a low income, not only self-employed. In result, more people would enter the official labor market, and the economic growth would speed up.
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The starting point for the reform could be what FOR has been proposing for some years now: raising the flat rate limit of deductible business expenses and thus reducing the taxation of working people.
Contact with authors:
Aleksander Łaszek, Chief Economist
mail: aleksander.laszek@for.org.pl
Rafał Trzeciakowski, Economist
mail: rafal.trzeciakowski@for.org.pl
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