Taxes in Poland (1)
4November 21, 2012 by Aleksandra Łuczak
Prepared by Sara Synowiec, a Kozminski Univeristy student
Taxes in Poland constituted 87,6% of whole national income in 2011 (next 0,7% came form customs duty that we can also admit as a tax).
Taxes mean obligatory payments from consumers and producers to the state treasury.
Taxes are often singled out as direct and indirect:
- Direct taxes are calculated on income in a clearly defined way, mostly as a percentage rate, e.g.:
Personal Income Tax (PIT) has been paid in Poland since January 1992. Nearly all Pole’s income is taxed (pensions, income from rental or sale of real estates and property law). Spouses can sum their income and tax it jointly.
Tax is calculated on net income, which means income is reduced by purchase costs (i.e. value of used raw materials or fund for advertisement) or by other outgoings (i.e. payments for renovation). PIT is charged monthly in advance in order to generate regular incomes to national budget. Rates and thresholds are variable. They are 18% or 32% in 2012. In 2013 they will stay at the same level.
Corporate Income Tax (CIT) has been obligatory since February 1992 and is calculated on corporate income reduced by costs of its procurement. In spite of the word “corporate”, CIT has to be paid also by institution without legal personality (hospitals, schools and some associations). CIT rate accounts for 19%.
- Indirect taxes which are more “anonymous”:
Value Added Tax (VAT) has been obligatory since July 1993. Tax base is fixed not by value of sale but by added value – total revenue minus material costs. In practice, VAT is charged on total amount of sale but after that tax payer receives a tax rebate of VAT included in prices of used raw materials.
Vat has many advantages. Firstly, it is general, so scale of sacrifices (loss of total surplus of private incomes) caused by this tax is minimal for economy. Secondly, it is easy to transfer on the purchaser, so in fact, it is paid by consumers which is a very positive phenomenon for economic growth and convergence. Finally, VAT is an efficient source of income to the budget. In 2012 VAT is equals 23% and VAT rebates 8% or 5%.
Excise tax has existed since July 1993. It is hidden in prices of alcohol and tobacco goods, fuels and goods considered as luxurious.
Games tax since 19 November 2009. Kind of tax regulated for gambling games. Rates vary according to the kind of games.
In Poland, burdens of labor costs are very similar to taxes. They are mostly paid by employers as contributions to Social Insurance Fund (FUS) {all abbreviation from Polish names}, Social Insurance Institution (ZUS) and Labor Fund. From this monetary sources are paid pensions and annuities.
You can view interesting data about taxes in Poland here:
What do you think about taxes in Poland? What kind of tax is better? Flat rate tax or progressive tax? Is only flat tax fair? Is progressive tax an unfair “penalty” for successful people?
Have your say!
Category Poland, Taxes | Tags:
What to say about taxes? They are essential to make the county stay alive, but they should not be like a punishment. The government should show us, that we are paying taxes, they are high, but they are necessary to develope the infrastructure, rents or culture. Nowadays we can see another problem – we are paying taxes but the government treats us like ATM with never endng bang account. Please have a look at VAT, when you make a deal, payment terms for your contractors is about three months, but VAT you have to pay at the end of current month. What is more? You cant borrow money from the bank, because you have to have 2 years of profitability to do it. So we have to be a society of wizards to run our own businesses in a young age. So I would like the government to notice that they are killing enthusiasm to work in young people. And please tell me who else if not the youn society ( right now ) have to support the rental system?
Taxes in Poland are not that high compared to the other countries in Europe. For example Austria, Belgium or Sweden. What kind of tax is better ? Flat or progressive rate tax? Well it depends. The flat rate tax is supposed to be more “fair”, because everyone will pay the same percentage of their income and it will never rise , but is it really fair ? 16% for someone that earns 1650zl can be huge compared to the one that is earning 50 000zl each month. When you look at that example most of you will say that progressive tax is a way to go right. Let the first person pay for example 8% and the second one 40% . However in my opinion the flat rate tax is much more better. Why? The best example right now is what is happening in France . They just enforced the 75% tax (that turned out to be contrary to the constitution) for the most wealthy people (around 1 500 people) and all of a sudden they (those 1 500) started to change their nationality because they can not agree with that . I support them. If I am a wealthy person why do I have to give 75% of my money to the country that will waste it anyways. In Poland 75% is a punishment for hiding you income. How does it sounds that a wealthy person have to pay more just because he/she did something right, he/she maybe changed something , that he/she is successful , does it mean that the person must be punished for working hard (in most cases , I am talking about private entrepreneurs not the public ones that will earn 50k doing nothing and still whine). So yes the progressive tax is an unfair penalty for the successful people.
In my opinion polish taxation system is far from being perfect. I do not suport flat taxes. The equality of taxes is not about every person paying taxes according to the same tariff. I not only support progressive taxes, but I am also for increasing the quantity of tax grades. I do not think that this solution is harmful to successful people, as people who earn much money can always use Professional advice in order to pay less.
In Poland taxes are insanely high. To compare – in England they amounts around 16% and in Emirates there are totally no taxes! Our country have the highest taxes in the whole Europe excluding Sweden. In that country they are even higher than in Poland but we should act on that, that for example, the hospitals in Sweden are in much better condition than they are in Poland. An average big company in Poland pays yearly for the country around 2 mln zlotys. Despite the fact this is an insanely high amount, the big question is – WHAT HAPPENS WITH ALL THAT MONEY? The hospitals are in lamentable state. The same thing with roads and service in all state and national institutions… Where is it then? Because from what I had notice “we” have all the time have too less money to make anything better.