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Ewelina Nojszewska
Government Budget and Selected Changes in Personal Income Tax in Poland, 1991-1999
The paper seeks to estimate the financial impact of the revised amounts of non-taxable income and in the tax threshold levels on the Polish government budget.
The author's calculations indicate that following the indexation of non-taxable income amounts between 1993 and 1999, the budget "lost", nominally, 11 bn zloty, which translates into 3 bn zloty in real terms.
The revaluation of the tax thresholds generated additional government revenue. During the period 1993-1998, the budget gained nearly 700 m zloty in real terms on this account.
Thus, the changes worked in the opposite direction. However, the revenue gain resulting from the revaluation of the thresholds was marginal compared to the loss from the indexation of non-taxable income amount.
The net effect on the budget was a loss of 2.5 bn zloty in real terms (in 1995 prices) in the period analysed. At the same time, the tax payers, who were able to retain these amounts, seemed to have little awareness of the fact.
Moreover, the sharp differences in gains and losses in the respective years indicate that the changes were rather incidental and did not constitute part of a more comprehensive plan.
The author's calculations prove that neither the overall quality of the Polish tax regulation nor its economic efficiency benefited from the changes described. These were ad-hoc and, while aiming at increasing government revenue, often produced the opposite effect.
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