Poland eyes investment boost with new economic programme, says minister

FILE PHOTO: European Union finance ministers meet for monthly talks in Brussels
FILE PHOTO: Poland's finance minister Tadeusz Koscinski and British Chancellor of the Exchequer Sajid Javid attend an European Union finance ministers meeting in Brussels, Belgium January 21, 2020. REUTERS/Johanna Geron/File Photo

July 15, 2021

WARSAW (Reuters) – Poland is hoping to boost investment with its “Polish Deal” economic programme, the finance minister said, as it banks on a raft of measures worth an estimated 1.5% of gross domestic product to help the country rebound from COVID-19.

The government says the “Polish Deal” will cut taxes for the vast majority of Poles, while boosting spending on health and encouraging companies to invest. But business leaders and a junior partner in the ruling coalition have opposed changes to income tax that will mean higher earners pay more.

“Solutions such as a higher tax-free amount and a lower effective tax rate as a result of raising the second threshold themselves constitute a demand impulse needed to revive the economy,” Finance Minister Tadeusz Koscinski wrote in response to questions sent by Reuters.

“However, this is only the tip of the iceberg of what we propose, because there are also a number of solutions on the table to stimulate the development and investment of domestic companies.”

Koscinski said that the programme would offer incentives for venture capital investment and listing on the stock exchange, while other measures would make it easier for Poles abroad to move assets and business activities to Poland.

However, critics of the plan say that it will complicate the tax system and punish the middle class as a result of a change that means health insurance contributions will no longer be tax deductible, accusations Koscinski rejects.

“We are not complicating the tax system, we are simplifying it… thanks to the reform of the Polish Deal, the system will also be fairer.”

Koscinski said initial estimates put the cost of the programme at 1.5% of GDP in 2022.

“With the draft budget act, we will present new macroeconomic indicators that will take into account the assumptions of the Polish Deal,” said Koscinski.

“It should be noted, however, that the vast majority of macroeconomic effects will appear from 2022.”

(Reporting by Pawel Florkiewicz and Alan Charlish; Editing by Alex Richardson)