(Photo credit: Rafał Zambrzycki, Chancellery of Sejm)
We are glad to note that one of the recurring motives of PM Szydło’s expose was the notion of “de-bureaucratization”. It was used in the context of many aspects of socio-economic life, including the context of entrepreneurship. Changes are needed not only to restrict the risks related not only to establishing economic activity, but also to conducting it. The economy has to be deregulated by removing administrative obstacles and burdens, unnecessary procedures and formal requirements which consume entrepreneurs’ time, money and effort.
The announcement of increased investments and a decisive shift towards innovation has to be assessed positively as well. We hope that companies investing in research and development, and implementing state-of-the-art solutions will be supported by the state with appropriate instruments a.o. tax exemptions and deductions. What is more, there were declarations of a strengthened cooperation between science and business. This is a key component of a program to improve the innovativeness of Polish companies and our economy as a whole. Specific propositions in this regard are needed to show how the Council of Ministers and other central organs intend to meet these goals. The picture of economic policy of completed by a declaration on further investment in R&D infrastructure, as well as facilitating the growth of bio- and nanotechnologies.
We appreciate the fact that the efficiency of the judicial system was addressed, particularly with regards to civil and economic proceedings. Despite some advances in this field the time it takes to settle cases is still far too long. Not only legal, but also organizational changes are needed – when it comes to the judge/citizen ratio and the expenses on court Poland does not significantly diverge from the European average. Human and capital resources are simply used in an inappropriate and inefficient way.
Ms Prime Minister said nothing of the changes needed in the Labour Code. She only announced the liquidation of the so-called “waste contracts”, but there were no specifics either. The proposition of introducing a 12 PLN per hour minimum wage will not solve the problem, Changes which will encourage employers to create jobs and use contracts of employment are necessary. There were no such propositions in the expose.
Ms Prime Minister repeatedly invoked the need to conduct dialog and cooperate in introducing legal regulations. We will hold PM Szydło to her word and would like to remind her that the Social Dialog Council is already working. The Wage Pact mentioned in the expose could also be subject to work in the Council.
As far as vocational education is concerned, the government intends to adapt it to the labour market. It is the only appropriate direction in which this system can evolve and its effectiveness will largely depend on the scope of cooperation between vocational schools and business. However, there are no details on how this strengthened cooperation would work – other than that it would be expensive.
PM Beata Szydło announced amendments in next year’s budget – the dividend income is to increase by a.o. 1 bln PLN and the deficit will be increased by 1.5 bln PLN at the maximum. This is far too little to carry out the promises made in the expose, particularly as the 500 PLN for every child program, lowered pension age and an increased tax threshold are to be passed during the first hundred days of the government’s work. This means that, despite the quick preparation of the aforementioned projects, the declared changes will most likely come into force with a delay of one year or more. Sadly, no details were presented as to which drafts would have a priority, though earlier declarations suggest that the “Family 500+” will be the first in line.
Not all elements of the new government’s program are equally feasible. The payment of 500 PLN benefits for the second and every next child (as well as the first one in the case of poorer families), which – as highlighted in the justification of the draft – would cost at least 19 bln PLN every year, would only be possible if the plans regarding the tightening of the tax system, particularly VAT and CIT, were met in their entirety. Should that be the case, however, the tax threshold could not be increased to 8 000 PLN in 2016 and would also make the introduction of such a measure in 2017 highly unlikely as well. Short-term, lowering the pension age would be expensive, but unfavourable demographic trends, decreased benefit value, as well as the massive financial imbalance of the social insurance system, mean that a longer job activity is a necessity which we cannot avoid.
The expose gave hope for necessary and long-awaited changes in tax law and the functioning of tax administration. Carrying out the promised moves will present a challenge for the new government, but they are desirable for entrepreneurs and could significantly improve their situation and dynamize their economic activity. Particular attention should be devoted to the proposition of cutting CIT for small entrepreneurs to 15 percent, introducing a double investment deduction for those reinvesting their profits in growth and creating an efficient tax exemption system. The key to sustainable development is undoubtedly increasing the innovativeness and competitiveness of Polish companies. Therefore, entrepreneurs need and expect such support on the part of the state.
Beata Szydło drew attention to factors obstructing Poland’s economic growth – excessive bureaucracy and increasingly stringent fiscalism. The announced tax administration reform – which will consist on the one hand of reducing formal burdens on taxpayers, and on the other hand of combatting tax abuses and crimes – is to be assessed positively. Entrepreneurs expect the state to effectively tackle VAT fraud and to improve the efficiency of enforcing excise obligations.
It should be appreciated that for the first time since 2007, the expose included necessary reforms in healthcare. Regrettably, they were so general that it is hard to clearly assess.
News of changes in healthcare are no shock, as their principles are consistent with the PiS program of 2014. The proposition to change the healthcare and rescue service systems into a health service and a national medical rescue service, respectively. Such a shift indicates a strong reorientation from a pro-market model focused on the quality of medical services to a national model, where other factors are likely to be decisive in choosing medical service providers.
In last year’s program, PiS proposed a budget system for financing healthcare (though without getting rid of healthcare contributions, which would go directly to the budget – rather than to NFZ through ZUS, as is the case now). These funds will be divided using an algorithm and sent to Voivodeship Offices which will, in turn, be responsible for choosing medical service providers. Moreover, the expose suggests that PiS does not intend to liquidate private hospitals, but does want them to be clearly separated from public clinics. The program indicates that public entities will have a priority when service providers will be chosen. According to PiS, hospitals cannot be profit-oriented – medical services have to be free for patients and the changers are aimed at improving citizens’ trust for the healthcare system, This declaration is utterly baffling. If only hospitals are guaranteed state financing (as it is the state that prices services), then they are providing medical services free of charge as part of the public system. It is also hard to fathom the meaning of the declaration that medical entities should not be profit-oriented – without profits there will be no investment in improved service standards, infrastructure or state-of-the-art medical devices. The idea of establishing a Fund for the Modernization and Maintenance for Public Healthcare Entities is completely misguided. It will lead to excessive bureaucratization and negatively impact the transparency of decisions of on the assignment of limited resources.
Ms. Szydło announced the introduction that free medication for people over 75 would be introduced within a hundred days of the government’s establishment. Earlier announcements indicate that it will only pertain only to the poorest citizens and to medication subject to refunds – which means that he total cost stands at ca. 250 mln PLN. In principle, this is a good solution, but it would be much better if an annual limit on patients’ expenses were introduced. Medication would have to be paid for if this threshold would be exceeded – such a proposition was previously included in the PiS program.
In the opinion of Employers of Poland, the most important thing for patients is that they receive high-quality medical services relatively quickly. Meanwhile, the expose did not indicate that the government will endeavor to increase expenses on healthcare (to 6 percent of the GDP, as announced by the Minister of Health) and did not mention the quality of services – only stressing that the y will be provided by public entities. Therefore, politicians’ plans may once again completely miss the expectations of patients.