Poland: The Bill for Government Services in 2017

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On April 27, 2018, Civil Development Forum (FOR) presented The Bill for Government Services in 2017, which shows the structure of Poland’s government expenditures. Like every year, the current seventh edition of the campaign took place just before the tax filing deadline.

That day, the employees and volunteers of FOR were present in front of the First Tax Office headquarters in Warsaw, where they informed passers-by about the public sector finances, handing out copies of the Bill and responding to questions of journalists and all other taxpayers.

The Government Spends More and More

For the last seven years, FOR has been analyzing public spending and calculating their amount per one inhabitant of Poland. The data presented in this way can be easily compared with our own earnings and expenses.

In 2017, “The Bill for Government Services” per one inhabitant amounted to PLN 21,491 and was higher by PLN 1,338 than a year earlier. The government’s expenditures were growing faster than the economy. This is a significant change – since 2010, the public spending in relation to GDP had been systematically decreasing, which meant the decreasing role of the government in the economy. Because the government has no money of its own, and the resources it spends come from taxpayers, its growing role in the economy must sooner or later lead to tax increases. Yet in 2016, the growing government activity was partially masked by a temporary decline in public investment, related to the completion of projects financed from the previous EU perspective. In 2017, with the rebound of investments co-financed with the EU funds and the start of new programs, the growing activity of the government is clearly visible. The Bill that taxpayers have to pay increased by as much as PLN 1,801 in the last two years.

In 2017, the Bill for the first time shows the exact cost of the “Family 500+” program – 619 PLN per one inhabitant. This one item is responsible for more than 1/3 of the increase in government expenditure in the last two years.

The second fastest growing item were expenditures on old-age and disability pensions, which increased by PLN 409. The full costs of the reduction of the retirement age by the Law and Justice government will be visible only in 2018, as the reduced retirement age has been in force since the last quarter of 2017. It should be stressed that expenditures on retirement pensions already constitute the largest part of the public sector spending.

Pensions, education, and healthcare together account for more than half of the government expenditures. In 2016, the largest categories of expenditures (per capita) were:

  • Pensions – PLN 6,516
  • Education – PLN 2,324
  • Healthcare – PLN 2,310
  • Social assistance – PLN 1,902;  (including PLN 619 for the “Family 500+” program)
  • Transport – PLN 1,753
  • Military, police, prisons, courts – PLN 1,456
  • Administration – PLN 1,076
  • Interest on public debt PLN 804

Many people equate government spending with the administrative expenses, which actually account for only about 5% of the expenditures. A survey conducted in April 2016 on behalf of FOR showed that over 1/4 of respondents believe that spending on administration constitutes the largest part of the government expenditures. This ignorance of voters is abused by politicians who are eager to promise an increase in spending on pensions or healthcare at the expense of unrealistically lower spending on administration.

Expenditures of the government include not only the expenses of the state budget but also local governments, NFZ (National Health Fund), FUS (Social Security Fund), and KRUS (Agricultural Social Insurance Fund) and many other entities. Although institutions account for the vast majority of public spending, it should be remembered that the entire public finance sector covers over 61,000 institutions. It includes numerous schools, universities, hospitals, but also entities such as municipal cemeteries, parks or film studios “TOR,” “ZEBRA,” “KADR.” As it is impossible to obtain data for all 61,000 entities some of them appear in the category “Other.”

The Bill for Government Services deliberately presents the general government expenditures per capita in a very simplistic way.

The amount of taxes and contributions paid by a given person depends on that person’s earnings and purchases. On the website SprawdzPodatki.pl, prepared by FOR, everyone can check how many taxes and contributions are taken from his salary. After entering an estimated size of purchases, anyone can receive their own personalized Bill for Government Services.

The knowledge of the structure and size of the public sector spending is essential as without it Polish citizens are unable to assess and verify irresponsible promises by politicians.

The Bill for Government Services is inspired by the project initiated by the Slovak think tank INESS. SprawdzPodatki.pl is inspired by the Tax Calculator created by the Lithuanian Free Market Institute.