Poland facing budget crunch in 2017 suggest official

By bne IntelliNews March 29, 2016

Poland needs to improve tax collection by about PLN12bn (€2.8bn) in 2017 in order to keep its budget deficit below the 3% recommended by the European Union, the country's deputy finance minister said on March 29.

Poland left the EU’s Excessive Deficit Procedure – launched for member states with deficits exceeding 3% - in 2015, shortly before the populist Law and Justice (PiS) won power with generous spending promises. Doubts have been gathering over the new administration's ability to keep the deficit at bay as it seeks funds to pay for the pledges, which include a child benefits programme set to cost PLN17bn (€4bn) in 2016 and PLN23bn in 2017.

Next year is going to be particularly difficult in terms of controlling the deficit, because it will be the first full year of child benefits being paid out, after their launch from April this year, deputy Finance Minister Leszek Skiba told Rzeczpospolita.

“We will also begin carrying out other government pledges [in 2017], such as lowering of the retirement age, [increasing] of tax-free income, [or] changes in the copper tax,” Skiba said.

The government has introduced a bank tax and is working on a retail levy, although it is not yet clear what form this tax will ultimately take. Warsaw has also suggested numerous times that it plans to lower the mining tax, which is essentially a special levy on state-controlled copper miner KGHM.

“Our early estimates show we will need at least PLN12bn in improved tax collection to keep the deficit at 3% of GDP,” Skiba said. He also suggests the room for further spending plans is “minimal” if the deficit is not to go over the 3% threshold.

Joint revenue from the bank and retail taxes would be around PLN7.5bn in 2017, the official estimates. However, lenders are reportedly working out legal means to avoid the bank tax, while the fate of the retail tax is unclear.

On top of that, unless copper prices rebound in 2017, revenue from the mining tax is also in doubt. The government is already resigned to reducing projected income from the tax to around PLN1bn in 2016, from earlier estimate of PLN1.53bn, it says.

Skiba admits in the interview that the European Commission has estimated Poland’s deficit at 3.4% of GDP. “We are expecting the commission will be sceptical about [Poland’s ability to improve tax collection],” the minster said.

 

 

Related Articles

Turkish authorities reportedly plan to curb interest rate race for deposits

Turkish authorities are set to step in to end a potentially dangerous race among the country’s banks to attract deposits, fearing the aggressive strategy may hit the economy through higher lending ... more

Hungarian PM announces generous family support scheme in big election drive

Prime Minister Viktor Orban has outlined ambitious new family policies at the Budapest Demography Forum to challenge Hungary's falling demographics.The government's aim is to increase the number of ... more

Ukraine's central bank cuts key policy rate to 12.5%

The National Bank of Ukraine (NBU) will cut its key policy rate by 0.5 percentage points to 12.5% per annum from May 26. The move is consistent with the pursuit of inflation ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss