Even PLN 29.1 billion – that's what the Ministry of Finance says would cost income taxation exemption (PIT) for all parents with at least 2 children. This idea, inspired by Hungarian solutions, appeared in the interpelling of Members Confederationswho advocate the application of akin reliefs in Poland. However, the government has provided detailed calculations showing that the improvement would benefit mainly the wealthiest.
Confederation for the Hungarian model
The inspiration for the parliamentary interpelling was government policy Viktor Orbánwho introduced Lifetime income taxation exemption for mothers with at least 4 childrenand is presently planning to extend the relief to women with two or 3 children.
As they pointed out Karina Anna Bosak, Michał Wawer and Witold Tumanovich, akin proposals increasingly appear in Polish public debate. They call for exemptions to include Not only mothers, but besides fathers raising multi-children.
Ministry of Finance: costly and egalitarian reform
In consequence to the interview, the Ministry of Finance prepared a forecast of the cost of specified a reform. As calculated, exemption from PIT parents 2 and more children (on a taxation scale) already in 2025 would mean a failure of the state budget of about PLN 29.1 billion.
According to the Ministry’s data, The benefits of specified relief would be very unevenly distributed:
- Only about 2 percent. profits would go to Half of the least earnable parents.
- About 67%. the benefits would be 10% of the best-earned parents.
The reason for this fragmentation is that people with lower incomes already benefit from a advanced tax-free amount (30 1000 PLN) and family benefitsCommon They're gonna lose their taxation obligations.. Therefore, the exemption from the PIT would not importantly improve their financial situation.
Who would truly benefit?
According to MF estimates, the improvement could benefit around 2.6 million taxpayerswhat constitutes less than 10% of the full number of people accounting on a taxation scale. Average profit for this group would be over 11 1000 PLN per year, which indicates that the beneficiaries would be mainly parents from higher income brackets.
Current taxation breaks for families
Currently Polish law provides a number of taxation preferences for families raising children:
- Child relief:
- PLN 1112.04 for the first and second children,
- 2000 PLN for the 3rd child,
- PLN 2700 for the 4th and each.
For the first child, the income criterionwhich does not apply to subsequent children.
- Joint settlement of spouses – reduces effective income taxation.
- Rehabilitation relief – parents have children with disabilities.
- Exemption from PIT to PLN 85 528 for parents at least four children – the current solution, which includes both mothers and fathers.
Reform with political possible but uneven in action
Although the Confederate proposal can respond to the needs family policy and to be part of the fight against the demographic crisis, current data indicate that the introduction of specified a wide taxation exemption would bring limited effects on the poorest families, for that significant benefits for better placed households.
Budget cost of nearly PLN 30 billion makes it impossible to keep this improvement without additional sources of backing in the long term. It is besides hard to consider it socially fair if taxpayers from the highest income are the main beneficiaries.
Will Poland follow Hungary?
The answer of the finance department does not close the subject. Possible The subject of taxation breaks for families will become the axis of electoral campaigns or subject to further analysis and debate in the Sejm. There is besides a likelihood that alternatively of a full exemption from the PIT, the government will decide to Extension of existing reductionsWhat could bring more sustainable and equitable social effectswith lower budgetary burden.
Continued here:
Mothers without PIT for the remainder of their lives? Government reveals cost: PLN 29 billion
