The report’s authors measure the quality of the tax system in five areas. It is about: the level of taxation on legal and natural persons, consumption and property and the rules for taxation of cross-border activities. It takes into account not only the level of rates (competitiveness), but also the complexity associated with many preferences and exceptions (neutrality).
Complexity is the biggest problem in Polish law
In the latest edition of the report, Poland ranked thirty-sixth, penultimate. Only Italy was rated worse. Polish position laws The tax is the same as last year. However, we are three times less than it was two years ago. The compilation shows that the biggest problem with the Polish tax system is complexity. Poland also performs poorly in terms of the tax base for taxing consumption, which correlates with the existence of a wide range of reduced rates. value added tax. Estonia took first place – for the eighth time in a row. Latvia comes in second and New Zealand in third.
Most importantly, the indicator does not take into account the most severe aspect for Polish taxpayers. It is about the volatility of regulations and the uncertainty related to their age. Tax regulations in Poland are modified from time to time, both to formally improve the system, and in practice often to “correct” the gaps. Even worse, in recent years it has become an outrageous tradition to work out at the end of the calendar year the changes in taxes and contributions, which will apply from January 1 of the following year. Marcin Zieliński, an economist, points out that this uncertainty is now further increased by working on the tax part of the Polish deal.
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The rulers remain deaf to the voices of NGOs and the business community. Work on tax regulations as part of the so-called Polish Order – the latest publicity by the PiS government – is being carried out in the same satisfactory pattern as the above changes. However, while the adjustments from previous years relate to relatively narrow categories, the so-called Polish order will affect all taxpayers who still do not quite know what the coming months will bring, and the more so called the Polish order creates holes in public finances, which will complement government by increasing or imposing other taxes – The last idea is to raise the excise tax – says Marcin Zelensky.
Taxes affect economic growth
As the authors of the International Tax Competitiveness Index note, The tax system has a significant impact on the economic growth of the country. A well-designed tax system allows taxpayers to easily calculate and pay the fees due and saves money to finance public spending. In contrast, a bad tax system is a burden on taxpayers and discourages them from productive activity, i.e. work and investment. Ranking authors evaluate the quality of the tax system from the perspective of two aspects:
- Competitiveness (marginal tax rates) – if the next acquired unit is subject to a higher tax rate, it reduces the taxpayer’s incentive to work or invest.
- Neutrality – A neutral tax system is one that distorts the decisions of economic entities as much as possible, for example by rewarding consumption rather than saving or investing in some sectors at the expense of others.
According to Marcin Zelensky, It turns out that the Achilles heel of the Polish tax system is complicated. While for the peak of the wedge in the case of taxation of legal and natural persons, Poland ranked 5th and 6th, respectively (relatively weak in the case of taxation of consumption – 28th), in terms of the complexity of its place: 28 (taxes of legal persons), 30 (taxes on individuals) and 37 (excise taxes). Poland is also performing poorly in terms of the tax base for taxing consumption.
We are all used to bad law
a. Doctor Hebb. Bogumił Brzeziński of Nicolaus Copernicus University in Toruń also points out that the poor state of Polish tax law is so evident today that in public discourse such a state is gradually being recognized as objective, natural and additionally stable. In his opinion, this is a big problem.
The professor’s statement shows that the tax code user community has stopped worrying about whether a group of MPs can actually prepare a decent tax law amendment bill, and whether the time between 11:00 p.m. on one day and the second on the next is the best time to pass Invoices containing tax code regulations. On the other hand, experts are wondering what the results of these new regulations mean. If nothing makes sense, or if they contain behavior directives contradicting each other or with other provisions still in effect, only optimists suggest changing the provisions. The rest (and perhaps the majority of them) are demanding either an official interpretation or, which is recommended, a decision by the Supreme Administrative Court clarifying the legal situation.
This “reconciliation” with procedural neglect and often sad results is caused by the experiences of the past few years of parliamentary practice. It is likely that the process of creating a tax code will be fixed, but – as noted by the professor. Brzeziński – There is no one to talk about. In his opinion, an eloquent example of the attitude of the authorities on this issue is the fate of the draft Tax Code, which in a certain way regulates the difficult issues of the regulations of the General Tax Code. There is no new tax code, there is no such thing, and the work of “stuffing” various sets of new regulations into the text of the tax decree is in full swing. There is not much to talk about updating the provisions regarding income taxes or the tax on goods and services. This situation will change one day. However, it is impossible to say when. In 2015, Irina Oog said in one of her radio speeches: “The tax code creation system has reached rock bottom. Only the best can be obtained. The diagnosis turned out to be not entirely accurate – it turned out that it was not yet the bottom, but only the upper layer of silt. – concludes Prof. Brzezinski.
See more: a. Brzezinski: The bad state of the tax code is obvious >>
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