Let’s Raise the Tax-Free Allowance – On the Possible Alliance of Liberals and the Left Wing

Calculating Taxes Up And Down
via Flickr by kenteegardin || www.seniorliving.org

Politics is about achieving what’s possible given the time and circumstances. Such a way of thinking is often rejected by radicals of different political options who claim that any sort of compromise is simply unacceptable. As a result, such politicians usually remain in their niche not having any influence on what’s really going on and, most importantly, they do not fulfil the basic role of a politician: changing the reality by applying their political program.

For years, liberals have been struggling to lower and simplify Polish taxes. The results are, however, rather “moderate”, labour cost remains high, the dream of PIT flat tax – once a flagship project of the Civic Platform – is rarely even mentioned, and the recent governmental “temporarily” raised VAT rate to 23% seems to be becoming permanent. Every year, taxes and charges to the benefit of the state, not visible at first glance, are raised. Freezing the tax scale and tax-free allowance is the best example. As for other examples, we experienced also a recent slight increase in property tax, thus a tax for a house, an apartment, a plot as well as for spending holidays in a health resort or for having a dog.

Paradoxically, during the last 15 years, the slight reductions in levy to the benefit of the state, which freed and accelerated the economic growth of the state, were introduced by the governments which were by definition the antithesis of liberalism, that is the government of Law and Justice and of the Democratic Left Alliance. Following this observation, we will easily conclude that allies for lowering taxes should be sought in many different places and we shall simply talk about various solutions which may in the end turn out realistic, doable, the introduction of which would be possible. What I have in mind by stating that is the claim of the left on a significant increase of the tax-free allowance which was recently rejected by the ruling coalition. I’m convinced, taking into consideration the current political situation, the mood of media and the society, not to mention the ever increasing state expenditures (army – Russia), that that’s the only tax reduction that may really be introduced. The only one that may give a developmental impulse to the economy of the next few years just as effective was – at the beginning of the economic crisis – the lowering of the levies introduced by the government of the right in years 2005-2007.

Of course, we could have an economic discussion and try to prove that more beneficial to economic growth would be such tax reductions which would leave the bonuses in the hands of companies and allowed to increase the number of investments and workplaces. I also think so. There’s still, however, the tiny but fundamental obstacle – the likelihood of introducing such a tax reform in light of current socio-political mood is extremely small. Neither Law and Justice, nor the left will take up this idea and Civic Platform opposes to lowering taxes in general when we look at its previous decisions. Therefore it’s high time for an alliance of liberals and the left in the fight for a significant raise of the tax-free allowance – that’s the space in which we may really find allies and exert significant influence. At the same time, raising the tax-free allowance would boost the economy, increase the demand – especially for necessities – as well as improve the financial situation of the least-earning individuals in the country. Let’s try to achieve what’s really possible.

The original article was published in Polish at liberte.pl

Translation: Olga Łabendowicz