Week 12 [21-27.01.19] Taxes in Poland

Have you ever thought about the fact that taxes in Poland are too high? In my opinion, unfortunately yes. In the case of having a "contract of employment" we pay 18% income tax (PIT) and about 20% for social insurance (ZUS). How can you present it differently? If we work for a period of 10 years, then we work for two years for  our social insurance and we work for 2 years for the income tax. I believe that the income tax is immoral and unethical, because it punishes people who work and want to get rich ... The more we earn, the higher the percentage of tax thresholds apply to us. Of course, taxes must exist and are needed, however, I am a supporter of the minimum state and poll tax, that is, for every citizen. Taxes would be allocated to the army, police, courts and the smallest administration, it would amount to 500 PLN. At the moment, unemployed people receive benefits that work for people who work, which in my opinion is unfair. When it comes to social security, the goal is lofty - solidarity and "social justice", but let's look at the facts ... A few million Poles left Poland looking for better work (often lower taxed). For comparison, the tax-free amount in Poland has been at 3091 PLN for the last 9 years, in Great Britain it is 11,500 GBP = 60,000 PLN. The Polish society is aging, the average life expectancy has increased, more and more people are retiring, less and less work is being done, and fewer children are born because Poles simply can not afford  to raise children. The current government instead of lowering the taxes for Poles offers them 500+. I believe that this program is harmful because it encourages women to give birth to children and to stop working. But did anyone think about what would happen when the next government eliminated the 500+ program? I believe that a much better solution would be the option of deducting more money at the end of the year (PIT settlement) - this is the case, for example, in the Czech Republic.

The tax-free amount, or more precisely the amount of tax-free income - the amount of income that does not have to pay income tax. The tax-free amount is one of the elements of the tax system.

2018

• People who earning less than 8,000 PLN annually don't pay income tax

• Revenue in the range of 8,000 PLN to 13,000 PLN - degressive amount from 8001 PLN to 3091 PLN

• Revenue from 13,000 PLN to 85 528 PLN annually - 3091 PLN tax-free

• Revenue from 85 528 PLN to 127,000 PLN - degressive amount from 3091 PLN to 0 PLN.

The income below the threshold of the tax-free amount does not exempt Poland from the obligation to submit a taxpayer's annual tax return.

1992 - 2009 - 2016

In 1992 (in the first year for which taxpayers submitted tax returns) the tax-free amount was 4 million 320,000 PLN at that time. From 2009 until 2016 inclusive, the tax-free amount was 3091.00 PLN. The amount of the tax-free amount was in:

• 2009-2016 - 3091.00 PLN

• 2008 - 3089.00 PLN

• 2007 - 3013.37 PLN

• 2003-2006 - 2789.89 PLN

• 2002 - 2727.16 PLN

• 2001 - 2596,43 PLN

• 2000 - 2295,79 PLN

The Act on Personal Income Tax provides for a number of redundancies granted to individual professional groups on special terms. For example, in the case of parliamentary allowances, the tax exemption per annum is 27,000 PLN (2280 PLN per month).

Tax-free amount in the European Union

In the vast majority of countries, in addition to income tax, the tax wedge also includes compulsory insurance premiums, the amount of which may not be limited. This is, among others in Poland, where in turn paid insurance premiums reduce taxable income and tax due. In addition, in many countries the free amount is higher for taxpayers bringing up children.

State	Free amount	Free amount in EUR	% of the average salary	Comments
Austria	11000 EUR	11000	32%
Belgium	8680 EUR	8680	23%
Bulgaria	0 BGN	0	0%
Croatia	26400 HRK	3423,50	28%
Cyprus	19500 EUR	19500	71%
Czech Republic	165699 CZK	6464,17	45,6%	In the Czech Republic a tax reduction (discount) of 24840 CZK (for each taxpayer) applies. This amount is deducted from the tax due and can always be used. Full-time employee (without further discounts) the income tax will start to pay from an income of CZK 165700.
Denmark	46630 DKK	6200,40	10%
Estonia	1728 EUR	1728	14%
Finland	16100 EUR	16100	40%
France	5963 EUR	5963	18%
Greece	5000 EUR	5000	46%
Spain	5550 EUR	5550	21%
Holand	2103 EUR	2103	6%
Ireland	·         8250 EUR (personal tax Credit) ·         8250 EUR (paye Credit)	16500	50%	In Ireland, there is a tax credit of 1650 EUR + 1650 (single-person household). This amount is deducted from the tax due.
Lithuania	0 – 166 EUR	0 – 166	n. d.	The free amount is valid for taxpayers with a maximum income of 928 EUR. From 2016, a free increase of up to 200 EUR is planned.
Luxembourg	11265 EUR	11265	22%
Latvia	540 LVL	760,26	9%
Malta	11900 EUR	11900	76%
Germany	8130 EUR	8130	20%
Norway	54 750 NOK	about 5 745,50 EUR	9,71%
Poland (from 2009 to 2016 inclusive)	3091 PLN	704,30	6%
Portugal	4104 EUR	4104	32%
Romania	0 – 3000 RON	0 – 653,70	n. d.	No free amount above gross income of 3000 RON (653.70 EUR) per month.
Slovakia	0 – 19458 EUR	0 – 19 458	n. d.	No free amount above 2867 EUR of income per month gross.
Slovenia	3302 – 6519 EUR	3302 – 6519	n. d.[14]
Sweden	18800 SEK	2023	5%
Hungary	0 HUF	0	0%
United Kingdom	11500 GBP	13425,90	38%	The free amount decreases to zero by 1 GBP for each additional 2 GBP of income above 100,000 GBP. Social insurance contributions do not reduce the tax base.
Italy	4800 EUR	4800	17%
State	Free amount	Free amount in EUR	% of the average salary	Comments

Bibliography:

https://pl.wikipedia.org/wiki/Kwota_wolna_od_podatku

Questions:

1. What do you think about personal income tax (PIT) and corporation tax (CIT)?

2. Do you think that income tax should exist at all?

3. If you think it should, how much should it be and why? Should it be fixed, percentage, income-dependent or equal for everyone?