The Tribunal has ruled the current regulations regarding personal income tax unconstitutional. – This will give the new government yet another reason to increase the threshold, which was one of the most important declarations made during the election campaign – comments Łukasz Kozłowski, expert of Employers of Poland.
The stance adopted by the Tribunal is hardly a surprise – the income tax threshold has not been changed for the last 7 years which means that the real level of taxation imposed on Poles’ income has gradually increased due to price growth. This was one of the austerity measures which helped reduce the excessive deficit of the public finance sector and was taken into account in annual updates of the convergence program. However, even after the excessive deficit procedure had been lifted, an increase of the threshold was not included in the draft of next year’s budget.
At the same time, the main objective of the Tribunal’s ruling is not to stop the growth of real tax rates (eg. by taking the indexation mechanism into account), but to establish the threshold at a level equivalent, at a minimum, the living wage. Our earlier estimations show, that such a decision would restrict the income of the budget and the local government by 14.3 bln PLN per year at worst. Therefore, a quick realization of the ruling could only be possible provided other sources of income for the budget would be found.
Łukasz Kozłowski, economic expert of Employers of Poland