Rafał Trzaskowski, the candidate for the Civic Platform (PO) has promised tax cuts and social transfers worth at least 40 billion PLN (EUR 8.94 bn). The Warsaw Mayor is the opponent of President Andrzej Duda’s and the ruling Law and Justice (PiS) in the second round run-off in the presidential election due on Sunday 12 July.
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The figure of 40 billion PLN comes from adding together the cost of increasing the amount free of tax and the increase in pensions by 200 PLN (EUR 44.68) for every child parented.
Five years ago President Duda promised to raise the amount free of income tax to 8,000 PLN per year. This has been done only for young voters and those on low incomes.
Mr Trzaskowski is proposing a more complex system of tax relief in which all those earning less than 30,000 PLN (EUR 6700) per year would not pay tax and those earning between 30,000 and 65,000 (EUR 14,500) would have 8,000 (EUR 1,786) PLN free of tax with those earning above 65,000 eligible only for the current 3,091 PLN (EUR 690) free of tax and those earning over 127,000 (EUR 28,000) having no amount free of tax whatsoever. This would leave all those on the minimum wage free of income tax and no benefit at all for those earning over the average of 5,331 (EUR 1,190) per annum.
According to Michał Myck from the think tank CenEA the total cost of the tax relief package Mr Trzaskowski is proposing would be 20 billion PLN (EUR 4.47 bn). That is a similar cost to that of the promised 8,000 PLN (EUR 1,786) free of tax five years ago. The difference according to the think tank is that the beneficiaries would exclusively be the low paid rather than all taxpayers.
The problem is that the promise runs counter to Mr Trzaskowski’s declared aim of tightening the fiscal framework and ensuring containment of public spending. This applies especially to the idea of a 200 PLN (EUR 44) premium paid out to women pensioners for every child they have parented. This according to the think tank would amount to 20-32 billion PLN (EUR 4.4-7.15) as the number of female pensioners is close to 5.6 million and they have had on average 1.5 children each.
The proposed benefit would violate the principle of the pension being linked to the contributions made throughout working lives and move Poland towards a system of standard pensions.
The PO campaign team admits that the proposal has been introduced at the last minute. It did not figure in the programme Mr Trzaskowski produced just a few days ahead of the first round of the election. They also admit that it is an electoral gambit targeted at female pensioners. This proposal must be seen alongside the PO’s candidate’s support for the proposal made by the Polish People’s Party (PSL) to make pensions free of tax and his declaration that he would not veto any legislation which provides for bonus pension payments proposed by the government.
In contrast President Andrzej Duda is proposing to maintain the status quo in the pension system with the maintenance of two monthly bonus pension payments at a cost of just over 20 billion PLN (EUR 4.4 bn) to the state budget. The President is not proposing any additional income tax relief over and above those already implemented on his watch; the reduction of the standard rate of income tax from 18 to 17 percent and making the pay of those under 26 free of tax.
source: source Dziennik Gazeta Prawna, Poland IN
It is difficult for a President from the opposition to get his tax and spending proposals through a government which is hostile to him. This means that Mr Trzaskowski’s promises are never likely to see the light of day in terms of legislation and actual money for taxpayers and pensioners.
It is also debatable whether his proposals will mobilise the voters. Social transfers is political territory that has been successfully taken by the ruling PiS. They have actually fulfilled their social promises.
In contrast the PO were not exactly famous for fulfilling the promises they had made before being elected. Instead of cutting taxes they raised their level. Nor did they ever deliver reform of the tax system to create a flat tax.
But Mr Trzaskowski is banking on the tax issue swinging some of the radical right “Confederation” voters that he needs. The proposal for raising pensions for women who have had children is meant to endear him to an age group in which the PO has had problems with of late.
We will know on Sunday night or Monday morning whether these gambits have worked. Either way it is probably advisable not to bank on these measures ever coming to fruition.