The bill would exclude people younger than 26 from the duty of paying the tax, up to a certain level of income. The bill was promised by the ruling party in February.
“This is the first step towards reducing the difference between what the taxpayer receives and the amount the company has to spend on his employment,” explains the Finance Ministry.
According to the draft of the amendment to the tax code, income below PLN 85,528 (EUR 20,072) per year, would not be taxed at all. The changes will apply to income earned after August 1 2019.
The brake would cover many various modes of employment, with the exception of self-employment. However, young workers will still have to pay mandatory dues for state social and health insurance funds.
“Reducing the costs for people on relatively low wages will allow young people to have an easier start on the job market and, simultaneously, will allow people working off-the-books to return to the legal job market. It will also help increase workforce participation among young people and reduce unemployment in that age group,” claims the Finance Ministry.
The differences over the reform were one of the reasons for the departure of the previous Finance Minister, Teresa Czerwińska. She was replaced on June 4 by Marian Banaś.
The tax break is part of the so called “Kaczyński’s five”, five electoral promises given during the February Law and Justice (ruling party) convention. The other four promises were: a one-time bonus of PLN 1100 for every pensionnaire, increasing the basic tax deduction (the amount of income that isn’t taxed), widening the 500+ program to every child (currently it does not apply to the first child) and restoring local bus networks in backwater areas.