Improving Polish tax system in progress

Details of the plans to introduce further changes that are to make Polish fiscal system more flexible and friendly are regularly presented to public opinion by Polish Deputy Prime Minister and the Minister of Development Mateusz Morawiecki. However, he believes the changes should not be revolutionary, but rather improve how the system works systematically. The latest comments of Deputy Prime Minister Morawiecki touched on the topic of Polish government resigning from the plans of introducing a unified tax.

Poland, as a country that has been implementing the rules of a democratic country of law for 27 year, has a multitude of various tax regulations. It is difficult to argue with the concerns that demolishing the current system could introduce a major chaos. The changes currently proposed by the Deputy Prime Minister are fine-tuning present regulations and searching for the most flexible solutions.
Recently, the government decided to lower the tax-free amount in Poland for three million taxpayers. The change affected people with average income, for whom its introduction appeared the most urgent need. The step was a prelude to further modifications of the existing tax system, and work that is currently in progress is to bring improvements in many areas.

Resigning from introducing the unified tax has been already confirmed by the Economic Committee of the Council of Ministers, as Deputy Prime Minister Mateusz Morawiecki informed the public opinion this week. At the same time, he noted that the solution had substantial advantages, yet more negative implications of the step were discovered.

The idea to introduce a unified tax was obviously motivated by intention to simplify the existing system and eliminate its degressive character, i.e. the situation in which the increasing income brings diminishes the actual tax burden. According to the project, the completely new system was to guarantee transparency both for the employees as well as the employers who calculate the settlements. Individual parts of the output tax for transfer were to be calculated by the Ministry of Finance and forwarded directly to Social Insurance Institution and National Health Fund.

Analysts expressed a strong concern that introducing the unified tax will not be beneficial for entrepreneurs. Its introduction would for example mean liquidating the linear 19 percent PIT for people running business operations. It is this aspect of the potential implications of introducing a total remodelling caused the plans to be abandoned. Announcing the decision, officials assured the stability of tax law in Poland will be maintained and strongly signalled that the Polish government will keep treating development of entrepreneurship with priority when implementing further modifications.