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POLAND: Local governments appeal to PM

Representatives of local governments have issued an appeal to Prime Minister Mateusz Morawiecki, in regard to the introduction of new social policies. PiS’ “New Fice” assumes the introduction of  an income tax at a 0% rate for persons under the age of 26, greater exemptions and a third tax income threshold at PLN 42 764, which will enable taxpayers to pay a reduced rate of 17% instead of 18%. Local governments argue that they will suffer significant budget cuts as a result of lower income from personal income tax – part of the tax income is transferred to local governments. According to their calculations, forecasted loses may amount to PLN 6.6 billion. Furthermore, they point out that the current central government education subsidy does not cover the remunerations of teachers, even those prior to the recently promised raises. Twelve of Poland’s largest cities plan to file a class action lawsuit against the government for PLN 200 million.

The local governments hope to hold a meeting with PM Morawiecki to discuss these issues. Whether this meeting will take place remains to be seen. The New Five policies already require significant effort from the Ministry of Finance, which hopes to cover their costs by further tax sealing measures, as well as additional taxes. While the opposition from local governments will not affect these policies in the short-term, mounting criticisms are likely to prompt some amendments, limiting the scope of these policies after the Autumn parliamentary elections.