FOR Communication 3/2023: Additional tax on apartments: from myth to very bad policy
According to the increasingly popular narrative, apartments purchased for investment purposes are almost synonymous with unoccupied buildings, that is uninhabited properties. The villains are investors, both institutional (real estate funds) and individual (wealthy individuals). They allegedly buy apartments from the market in order to "speculatively" refrain from placing them on the market in anticipation of a further increase in real estate prices, thus deepening the housing shortage. Vacant flats became particularly pressing matter after the publication of the results of the last census. It showed that as of March 31, 2021, as many as 11.7 percent of apartments were uninhabited in Poland, and the vacancy rate in Warsaw reached 20 percent, writes Marcin Zieliński, member of the board and chief economist of FOR in his latest announcement.
So, since the problem seems to have been identified, the government announced the introduction in spring of one of its most frequently used solutions, which is a new tax, which this time is to cover vacant houses. We are now learning the details of the new duty and, as it turns out, the vacancy tax is actually supposed to be an additional burden imposed on individuals and companies who buy more apartments.
The results of the last census do not provide a clear answer to the basic question: is there a real problem of vacancy in Poland, or was it a temporary phenomenon resulting from seasonal factors, a pandemic and the fact that the survey was carried out during the construction boom? Nor do it explain who is most responsible for the vacancy: the private or the state sector?
Poland already has the strongest taxation of property among the countries in the region (countries of the former Eastern Bloc that joined the European Union). The ad hoc ideas of taxing investors purchasing apartments - even if they are not responsible for the vacancy problem, which we do not know how serious is - introduces another factor of legislative uncertainty, discouraging doing business in Poland.
Of course, the very idea of taxing investors is not about increasing the availability of housing for Poles, but about gaining more votes in the upcoming elections, attracting part of the left-wing electorate that shares the same myth of "bad investors" who give up earnings and thus maliciously deepening the housing deficit, and at the same time slightly improve the state budget. A lie seasoned with reminiscent of the times of the People's Republic of Poland, and at the same time extremely harmful rhetoric of the fight against wicked "speculators" who would be guilty of actual or imagined misfortunes affecting the country, does not cease to be a lie.
Contact to author:
Marcin Zieliński, FOR Board member & Chief economist
marcin.zielinski@for.org.pl
