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POLAND: Insurance Contribution Limits

Last week, the draft amendment bill abolishing maximum contributions for national insurance levies (ZUS) has passed through the Sejm. Currently, the law allows Poles to stop paying monthly ZUS contributions after their income exceeds PLN 120 thousand. This is a mechanism, which allows the insurer to avoid paying excessive pensions in the future. The abolition of this limit will mean that Poles will pay irrelevantly of their income, while the state will gain PLN 5.4 billion per annum. Over 350 thousand Poles will be affected by this change.

The draft bill faced widespread criticism amongst opposition parties, business associations, ZUS itself, and some members of the Law and Justice. The Solidarity trade union has also voiced reservations, and it is currently considering bringing this case to the Constitutional Tribunal for contempt of the legislative process. This issue was also addressed by the Minister of Labour Elżbieta Rafalska, who said  that a longer vacatio legis would be beneficial. During a recent meeting with representatives of businesses, Deputy Prime Minister Morawiecki declared that the Senate might have to further consider the presented reservations.

Ministers suggesting the need for further works are proof that the Sejm might have acted too hastily. There is recognition that the current version of the draft bill may negatively affect some relations that PiS is trying to foster. Morawiecki argues that the bill is motivated by reasons of “justice and solidarity” and that Poland has the most regressive tax system in the EU. Others are suggesting that PiS is seeking funds for further ambitious spending programmes. The responsiveness to criticisms, however, shows that this proposal is not an absolutely crucial step in the ruling party’s strategy.