Aleksander Łaszek

The Law and Justice government, when publishing the draft state budget for 2020, called it "balanced". This "balance" is based on one-off revenues and concerns only the state budget, which accounts for half of the entire public finance sector. After eliminating one-off revenues and taking all expenditures into account, the deficit will amount to 1.3% of GDP - that is, it will remain far from a sustainable improvement of public finances - and it will not take the promises of Saturday's Law and Justice election convention into account.

Exempting people under 26 from PIT is unfair. On the one hand, the government sees no problem in the fact that the wages of 27-year-olds earning a minimum wage (PLN 1774 net) are burdened with 40% taxes and contributions, including PLN 150 PIT, and on the other hand, it proposes to exempt over 3 times better earning 25-year-olds from PIT, thanks to which their net income will increase from PLN 5,909 to PLN 6,584, and the total tax burden will fall to 35%.

During the last national council, the PSL (Polish Peasant’s Party) repeated a number of its earlier proposals, the implementation of which would lead to a deterioration in the state of public finances. Returning to these proposals in a situation of growing deficit caused by the implementation of the Law and Justice party election promises is dangerous for Polish public finances.

The non-financial corporate sector is the heart of the Polish economy, where over 70% of the Polish GDP is generated.  In 2017, a person working in the sector of non-financial enterprises produced goods and services worth PLN 9.7 thousand on average monthly, but their net remuneration amounted to only PLN 3.1 thousand. What happened to the remaining PLN 6.6 thousand?

Recently announced reforms to Poland’s pension system are just the latest in a long line of changes made over the past eight years. Unfortunately, the majority of these have been motivated by short-term goals (either fiscal or political), without looking at the long-term stability of the pension system.

​The costs of Kaczyński's Five promises accumulate with the costs of previously announced government programmes, forcing tax increases and reductions in other expenditures, primarily on public services. Despite the high costs, the new programmes do not solve any significant problems, and are focused primarily on the electoral effect.

The Law and Justice (PiS) party’s new election promises of, namely, the “Kaczyński Five”, will cost the Polish public finances PLN 40 billion per year . In addition, the Law and Justice (PiS) party passed a resolution on the increase in a number of expenditures for the following years, mainly on health care and the army. The implementation of the “Kaczyński Five”, similarly to the PiS election promises of 2015, will force the government to relatively reduce expenditures for other purposes, raise taxes, and increase the deficit.

The introduction of the entrepreneurs' test is not a reform, but an attempt to find additional tax revenues needed to finance Morawski's Five. Giving bureaucrats the right to decide who can use the 19% PIT and who is to pay the full 40% PIT and ZUS contributions will be another source of conflict between the administration and taxpayers.

In its economic policy the Law and Justice party announced a repetition of its actions from 2007. At that time, at the peak of the world economic boom, the Law and Justice party government passed laws that came into force during the slowdown in 2008 and 2009, increasing the public finance sector deficit by 2% of GDP and forcing the PO-PSL government to look for savings. The current announcements were also communicated at the  peak of the world economic boom, but will only fully enter into force in the coming years, when economic growth will be slower according to the available forecasts and, as a consequence, the situation of public finances will be more difficult.

Transition of a country from the category of developing countries to developed one is a process that takes years. The change of category is a byproduct of institutional changes and accompanying increase in the level of living. Poland has been implementing reforms moving us toward market economy and democratic society since 1989.