CIR: New Government's Economic Programme (komunikat)

18.11. Warszawa - CIR informuje:

New Government's Economic Programme

Due to the deteriorating economic situation of the eurozone, the Government has prepared a set of measures to increase financial security of Poland and Poles. The most profound changes will be made in the pension and taxation systems. These changes are necessary for Poland to be able to growi in a sustainable manner and raise competitivness. The solutions proposed by Prime Minister Tusk during his parliamentary expos, are based on twin principles of social solidarity and fairness.

The economic situation in the eurozone is highly volatile, therefore the Minister of Finance will prepare three variants of the State budget. In December, the Government will submit the most likely variant to the Parliament. The goal is to leave the excessive deficit procedure in 2012 and decrease the deficit to one per cent of GDP by the end of this Government's term. In 2012, the proportion of the State debt to GDP will fall to 52 per cent and will be gradually decreasing to 47 per cent at the end of 2015.

Pension System

The Government will continue reforming the pension system in the spirit of fairness, elimination of privileges and stable public finances for future generations.

- Since 2013, the retirement age for both women and men will be gradually equalized and raised to 67 year. By increasing the retirement age by one month every four months, this level will be achieved for men in 2020, and for women - in 2040. Thanks to these changes, the Government will no longer place an excessive debt burden on current and future generations due to pensions. By 2020, Poland's debt in relation to GDP will decrease to 44 per cent, by 2030 - to 40 per cent, and by 2040 - to 35 per cent of GDP. Longer working age translates into higher pensions, especially for women. A woman who is now 38 years old and retires in the new system in 2040 at 67 will have almost twice the pension she would receive if she were to retire at 60. For a woman who is now 50 years old and as a result of gradual changes will retire at 63, this pension will be higher by 15-20 per cent. Gradual approaching to the new retirement age will allow the Government to conduct active policies supporting the employment of older
people. Concrete programmes will be developed by the Ministry of Labour already in 2012, in time for adopting them together with the new system. - In 2011, pensions will be adjusted by a lump sum. This type of adjustment, which protects the poorer pensioners, will be maintained during the crisis. - New rules for retirement of uniformed services will apply for those entering service as from July 2012 - the retirement age will be set at 55 years of age, and the duration of service will be extended to 25 years; - Privileged terms for retirement will be in future applicable only to miners working directly at extraction of minerals. Some other eligible for miners' pensions may be awarded "bridging" pensions, and others with enter the general system. - The entitlements of retired public prosecutors and judges will be reviewed.

Taxation

In accordance with the principles of social fairness and solidarity, unreasonable privileges and taxation gaps will be removed.

- Tax incentives should focus on promoting childbirth and multi-child families. That is why the Government will raise the tax relief for families with three or more children by 50 per cent. The tax relief for two children will remain unchanged, and the relief for the first child will be applied where annual family income does not exceed 85,000 zlotys, i.e., the first tax threshold. The allowance for a new born baby (Polish: becikowe) will remain in the families with income less than 85,000 zlotys; - The tax privilege for authorship contracts will be also limited. The 50-percent deductions from income will be possible for an annual income of 85,000 zlotys or more. Above this threshold, artists will pay the normal tax; - The tax relief for the Internet will be removed, because these services are increasingly cheaper, and the Government supports the development of modern infrastructure throughout the nation; - The possibility to circumvent the capital gain tax at bank deposits will be closed. The Government
will be steadfast in countering any other attempts at circumventing taxation.

Pension contributions

- Reduction of contributions to disability pensions during the most favourable time of the business cycle was excessive and resulted in a 20-billion plus deficit in the disability-pension system. It is necessary to partially reverse that decision, by increasing the contribution from employers by 2 percentage points. The contribution from employees will stay at the current level. Such change will decrease the deficit of the Social Insurance Fund by about 13 billion zlotys each year, starting from mid-2012. - In accordance with the Constitutional Court's decision, since February 2012 farmers will pay contributions to the healthcare fund. As a transitional measure, this will be varied according to the size of farms. The State will still pay the contribution for the farmers with lowest incomes, i.e., in holdings of up to six hectares. Farmers holding 6 to 15 hectares will pay half the contribution paid today by persons conducting business activity outside agriculture, and those holding more than 15 hectares will
pay the whole contribution, i.e. about 36 zlotys a month. This the amount paid by those who conduct business activity. As the next phase, the contribution will be paid under the same rules as in the general system, together with the possibility of tax deductions; - As farming is also a business activity, since 2013 the Government will start introducing accounting for farms, and thereafter income taxes under general rules. We will start from the biggest farms, and gradually spread these rules down to smaller ones. The income tax on farms will reduce other burdens, especially the agricultural tax. The introduction of accounting to farms is considered on the EU level in connection with future payments to farmers, thus we will be well prepared for that. - Once the issue of farming accounting is sorted out, it will be possible to build a modern system of social insurance for farmers, which will allow the disbanding of the KRUS, or the Agricultural Social Insurance Fund.

Natural resources

The State should draw more revenues from natural resources.

- The levy for the extraction of natural resources such as copper and silver will be increased; - As regards the extraction of shale gas, regulations will be prepared to ensure significant revenues for the State.

Leaner and subsidiary public administration

The Government's priorities include deregulation and changes for more efficient and modern public administration.

- Ministers will be assigned tasks/contracts for key projects and will be continuously monitored for their progress. - A new Ministry of Administration and Digitalization will work to increase the efficiency of Polish public administration. Officials' salaries will be linked to their efficiency and clients' satisfaction. The projects related to electronic communication between public offices and citizens will be coordinated and speeded-up; - Courts will operate more efficiently - court proceedings should be shortened by about one-third on average; - Construction-related procedures will be simplified - shortening the time for issuing Building Permits to 100 days for large and up to 60 days for small developments; - A half of the registered professions will be deregulated; - The excessive production of laws will be reduced - The Office of the Prime Minister will carefully monitor impact assesments and eliminate unnecessary regulations. Also, new laws will have to be reviewed after two years of their operation.

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