PiS announced a new “Polish deal” plan

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Poland’s conservative nationalist government has made plans to increase health care spending and cut income taxes as part of a comprehensive plan to boost the economy after the pandemic.

The so-called Polish agreement, which will include support for home buyers, pensioners and families, as well as tax cuts for low- and middle-income earners, is widely regarded as an effort by the ruling Law and Justice Party (PiS), until 2023 at the latest. Booth before the parliamentary elections.

Like most EU countries, Poland has also suffered from Covid-19, a pandemic that claimed the lives of more than 70,000 people and plunged the economy into recession for the first time in three decades.

Prime Minister Mateusz Morawiecki stated that the Polish agreement will give Poles the dream of catching up with the richer countries of Western Europe and expanding the country’s middle class. The deal will receive loans and grants from the European Union Recovery Fund. stand by. .

He said: “We have a huge opportunity in front of us.”[In the past] We always have to worry about freedom from external oppression. But today, we can care about the freedom to determine the rules of social and economic growth under the conditions of our own sovereign Poland. “

As part of the changes announced on Saturday, PiS and its two smaller allies plan to increase spending on underfunded healthcare systems, part of which has been overwhelmed by the pandemic, increasing from 5% of GDP in 2020 to 2020 It accounts for more than 7% of GDP in the year. 2030.

The tax system will also be abolished. The tax-free allowance will be increased to 30,000 zlotys, and the threshold for Poles to start paying the higher tax rate of 32% will increase from 85,000 zlotys to 120,000 zlotys per year.

Mortgage rules will also be revised, and guarantees will be provided to make it easier for young people to buy real estate, and the rules for building permits will be relaxed. PiS claims to create 500,000 new jobs, and will also bring further benefits to families with young children and pensioners, as well as an investment plan.

Morawiecki and his other speakers at the ruling party’s congress rarely provided details on tax cut financing.

Jaroslaw Gowin, deputy prime minister and head of the agreement, one of PiS’s two junior joint partners, admitted that wealthier Poles must pay more taxes, but did not elaborate. He also said that the national budget will be hit.

Polish Finance Minister Tadeusz Koscinski told the Financial Times that part of the tax cuts will come from faster growth. However, he added that the lack of fiscal changes will also be partially compensated by higher social security payments paid by workers and companies. This is caused by the changes, which will prompt more workers to transition from self-employment to formal employment. Employment contracts, and cancel the social security ceiling for self-employed payments.

Kosinski said that the annual net cost of tax cuts to the state budget is about 7 billion zlotys. He added that due to tax changes, local governments will receive another 3 billion zloty subsidies to fund co-funded investments.

Adam Czerniak, an economist at Polityka Insight, said that the government’s assumption of helping to achieve faster growth in the cost of the government’s plan is “optimistic, but I think it may happen”.

However, he expressed concern about changes in housing, including changes in the state’s mortgage guarantees for young borrowers, which could lead to overheating of the prosperous market.

He said: “In the business cycle of the housing market, the risk of guaranteeing a down payment is very high.”

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