A zero PIT tax for young people is one from the assumptions of the new ‘five’ PIS. Implementation of this relief is getting closer. The government adopted a draft amendment to the PIT Act, which is to enter into force on the day 1 August. However, this change is another complexity of the already difficult tax system.
It provides for exemption from taxation of personal income to be completed by individuals 26 the years of life which carry out work on the basis of employment relationship, cooperative employment relationship, business relationship, placement employment relationship or contract contract concluded with the employer.
The revenue to be released this year will be 35,636.67 PLN, Whereas 2020 is 85,528 PLN, So this is going to be the upper limit. first the tax scale threshold. However, the new relief does not relieve social and health contributions. Similar solutions already exist in other European Union countries.
In Belgium, for example, students who earn less than 7,570 EUR, do not pay PIT tax, in France PIT tax exempt are student salaries to 25. up to three times the minimum monthly salary.
It is not entirely possible to find a logical justification for excluding income from business activity, work contracts or graduate practices from the relief. This means that the most creative and entrepreneurial young people who start their own businesses will not be able to benefit from the exemption
The Ministry of Finance points out that the purpose of the changes is to reduce the fiscal burden on young people by reducing the so-called tax wedge. This is intended to allow young people to start working easily and at the same time give the opportunity to return to the labour market to those working in the grey area.
The assumption is that the change will also lead to an improvement in the employment rate of young people and a decrease in unemployment in this age group. However, it is probably a matter of stopping the emigration of young people, who, without seeing prospects in Poland, often choose to emigrate for a living.
Honestly, any tax reduction is good. However, the government's proposal from the very beginning has awakened and continues to raise much controversy. First and foremost, the scope of the new exemption is disputed.
It is not entirely possible to find a logical justification for excluding income from business activity, work contracts or graduate practices from the relief. This means that the most creative and entrepreneurial young people who start their own businesses will not be able to benefit from the exemption.
In this respect, the Ministry of Finance’s argument that they could use a linear 19-percent tax rate. Still 19% tax is not the same as 0.
It is also debated to include a new relief only for young people. There are doubts as to the compatibility of the new solution with the principle of equality before the law.
There are many social groups in Poland that need equally strong support in terms of professional activation and living on the labour market. For example, you can identify people aged 50+. According to various estimates, the employment rate of seniors in Poland is approx. 33% and is lower than the EU average. What? third post 50.
I feel excluded from the labour market. In many cases, their CVs remain unresponsive and go to a "black hole". In this situation, introducing fiscal solutions that differentiate the tax situation of citizens due to age is simply irresponsible and unfair.
Another issue is further complexity of the tax system, which was to be 3xP in the Ministry of Finance's assumptions – transparent, simple and friendly. Instead of further reductions and exemptions, the tax should rather introduce a general solution which would benefit all income tax payers.
Meanwhile, we are being given another replacement solution instead of proposing something really specific, such as the introduction of the promised uniform, higher tax-free amount without any thresholds and amazements.
The idea pursued by the Ministry of Finance to reduce income taxation is noble, but the idea of achieving it does not exactly match social expectations.
source: https://www.forbes.pl/opinie/zerowy-pit-dla-mlodych-kolejne-skomplikowanie-systemu-podatkowego/qdb3ksl
Author:
Andrzej Dmowski
Lawyer and Doctor of Legal Sciences of the University of Warsaw. From 2011 one from Managing Partners in Russell Bedford Poland. Previously on the BDO advisory network, as well as Deloitte & Touche. Author of the book “Transfer Prices”, co-author of the commentary “The Corporate Income Tax Act”, author of many publications on tax law.