The bill would exempt people younger than 26 from paying tax on earnings up to around 125 percent of the average salary.
“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, young people’s income below PLN 85,528 (EUR 20,072) per year, would not be taxed at all. The changes will apply to earnings accrued after August 1 2019.
The tax break would cover many various modes of employment, with the exception of self-employment and certain non-standard contracts. However, young workers will still have to pay mandatory contributions to the social and health insurance funds.
“Reducing the costs of employing 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 mainstream job market. It will also help increase workforce participation among young people and reduce unemployment in that age group,” claims the Finance Ministry.
Finance Ministry estimates some two million people will be covered by the tax break.
The bill still needs to be passed by parliament but is almost certain to do so, bearing in mind the ruling party’s majority in the legislature.