The reform of the tax system is due to enter into force in the next month. It's like the name of the Polish Deal doesn't sound funny. 2.0, taxpayers hope to ease the price, and there will be a little more money left in their pockets. The reform of the tax system has again taken all the attention of citizens in the media. However, it is worth noting what is happening in our country now, namely the galloping, two-digit inflation.
According to GUS data, the inflation rate reached in May 13.9%. This rate has recently been observed in Poland 1998.
For ordinary citizens, this means that the purchasing power of their salaries decreased by 13.9%, the example of remuneration in the amount 3,000 PLN net means that real purchasing power today is 2,580 PLN, even though the amount still affects the account 3,000 PLN.
The frantic inflation is accompanied by an increase in prices for all goods and services. The society is poorer and the inflation machine is unstoppable.
But look to the future. The government announces a reduction in the income tax rate on a general basis with 17% to 12%. The tax-free amount remains the same (30,000 PLN) and first tax threshold on a scale (120,000). It would seem that we have nothing left but to enjoy the reduced tax rate. Nothing more wrong.
One should not forget the so-called "intermediate tax", or health contribution, which is supposed to be a social benefit, but nevertheless meets all the characteristics of the tax.
For the record, we can no longer deduct the health contribution from the tax, which consequently results in a double charge on our income, first a due advance on income tax, and later on the same amount is charged to us due next month's health premium of 9% income.
I stress that we are talking about taxation on a general basis using a tax scale. The situation in the so-called "linearists" and "flat-raters" is slightly different.
Now, to get to the bottom of this, inflation is just getting a little more momentum. Experts from the Ministry of Finance estimate the peaks of inflation at 3rd and 4th quarter 2022. What's going on? Inflation drives price increases, and a sharp increase in prices leads to the need to increase the minimum wage so that those who earn the least stay on the wage line unable to reach for social benefits.
The government is announcing a two-step minimum wage increase next year. It is intended to be 3,500 PLN gross, this means an increase of about 16% in relation to today's amount 3,010 PLN gross. What does that mean for entrepreneurs?
Undoubtedly, employers will have to increase the budget for salaries of their employees, as the increase in minimum wage will result in an increase in contributions to the Social Security Office. It is not difficult to predict an avalanche effect, which will arise from the increase in minimum wage and rising prices.
There will be more inflation. Another large group in which pockets will hit a minimum wage increase is entrepreneurs. Higher minimum wage will increase contributions to ZUS.
In conclusion, the accelerated inflation will reach into every pocket, and the reduced tax rate will not improve the economic situation. The fight against inflation by tax reduction, the increase in minimum wage, the reduction of VAT rates on food, only postpones the economic crisis. It is worth thinking about it now, to create a strategy to best survive this difficult period.
Written by Darya Bannaya
Younger tax consultant. Graduate of Law at the Faculty of Law and Administration of the University of Warsaw, graduate of Global Business, Finance and Management in Warsaw School of Economics. Winner of the Ministry of Finance competition “Tax of Leaders” 7. edition.
Conducting trainings and conferences for foreigners in tax aspects of conducting and establishing business in Poland. He specializes in tax law, advising clients on current matters relating primarily to income taxes. Author and co-author of a tax law publication.