Tag: VAT

Taxes and Benefits in the Polish Parliamentary Election Campaigns

Authors: Michal Myck and Monika Oczkowska, CenEA.

The upcoming parliamentary elections in Poland, scheduled for the 25th of October 2015, have on the one hand stimulated debate on the record of the current coalition government, and on the other opened the debate on the nature of socio-economic policy to be conducted in the coming years. In this brief, we draw on two recent pre-election reports published by the Centre for Economic Analysis, CenEA. We discuss developments in tax and benefit policies under the coalition of the Civic Platform and the Polish People’s Party over the last eight years, as well as the pre-election pledges regarding tax and benefit policies to be implemented after the elections. We show a significant shift in policy priorities with respect to the distributional effect of the tax-benefit policies between the first (2007-2011) and the second (2011-2015) term in office, towards more support for low-income families. We also argue that, judging by the presented electoral pledges, Polish voters face a difficult choice between the promises of the opposition parties, which seem too costly to be realistic, and an enigmatic tax overhaul reform proposed by the governing Civic Platform, which is supposed to substantially benefit nearly all working households at a low cost for the state budget, with details of the reform design, however, kept away from public scrutiny.        

Distribution of the VAT Burden in Poland by Income Group and Demographic Characteristics

Authors: Michal Myck and Monika Oczkowska, CenEA.

The Value Added Tax (VAT) is the main source of revenue for the public budget in Poland. Though issues regarding VAT rates or tax settlement mechanisms are brought into the public debate in Poland on a regular basis, little is still known on the distribution of the VAT burden among Polish households. In this brief, we analyze the VAT relation to household income, consumption and demographic structure in Poland. We find that the VAT burden is inversely related to income, with the bottom ten percent of the population paying on average 16.3% of their income in VAT and the top income group paying only 6.8%. Larger households, such as those with children, pay about 11%-15% more VAT due to higher spending. However, as a result of different spending structures, the additional VAT burden of families with children is independent of the number of children and only marginally dependent on their age. These differences in the tax burden should be taken into consideration in the current debate on the possibility of unifying the VAT rates in Poland.