Is the Polish economy heading towards stabilisation or drifting towards a budget crisis? This question was posed by panel moderator Piotr Pilewski at the start of the debate held during the Economic Forum in Karpacz. He drew attention to the latest budget data: income of PLN 647 billion, expenditures of PLN 918.9 billion and a deficit of PLN 271.7 billion. Juxtaposed with the projected GDP growth of 3.5 per cent, these figures may raise concerns, he noted.

Demographics and social spending burden the budget

Former Finance Minister Stanisław Kluza reported that Poland, together with Romania, is among the countries with the largest deficits in the European Union. ‘Soon, a decision will have to be made: either we raise taxes or we cut social spending’, he said. He emphasised that fiscal growth alone will not be enough if spending priorities are not changed.

The head of the finance ministry in Jarosław Kaczyński's government in 2006 and the first Chairperson of the Polish Financial Supervision Authority also emphasised the impact of demographic trends. ‘Fewer and fewer people work, and more and more retire. It is not possible to balance this equation indefinitely’, he warned. In his opinion, it is necessary not only to think about the budget in a one-year perspective, but also to take steps towards achieving long-term balance.

Robert Gwiazdowski, professor at Łazarski University and expert at the Adam Smith Centre, emphasised that current social programmes do not solve demographic problems. 'The system is designed in such a way that it does not encourage people to take up work. The 500+ programme, now 800+, was intended to support families and increase the birth rate, but in the practical terms in many cases it has become a barrier to economic activity', he said.

Business wants stable law

Another topic concerned the quality of legislation. Gwiazdowski criticised the lack of predictability. ‘I wouldn't invest in Poland myself. The law changes too often, and the courts do not provide a sense of security', he said. He recalled the example of what is known as the residence registration relief: the tax authorities interpreted the regulations in one way, the administrative courts in another, and it was only after years that the Constitutional Tribunal ruled in favour of the taxpayers. ‘Thousands of people lived in uncertainty, as they were not sure whether they would have to return the money’, he emphasised. He also referred to legislative practices. “New regulations can appear in the Journal of Laws on Sunday evening, so that entrepreneurs do not have time to prepare. This shows a lack of respect for the market', he said. As an example, he cited the law on alcohol advertising, including the phrase ‘except for beer’. ‘To this day, it is not known why beer was excluded. There are no reports that explain this', he said sarcastically.

Tax advisor Krzysztof Flis from the Baker McKenzie Krzyżowski i Wspólnicy law firm expressed a similar opinion, referring to excise policy. He recalled what is known as the 2021 excise map, which ensured predictability and allowed entrepreneurs to engage in planning for investments. ‘It worked because everyone knew what the next few years would look like. Then the Ministry of Finance began to move away from this and introduce chaotic changes', he said. He cited the market of e-cigarettes and innovative products as another example. ‘First, they were burdened with additional taxes and expensive excise stamps, and then a proposal for a total ban appeared. How are entrepreneurs supposed to invest if they do not know what will be in force in a year’s time?’ he asked rhetorically.

Flis also pointed out the lack of coordination between ministries. ‘The Ministry of Finance introduces new tax stamps, while the Ministry of Health plans to eliminate the entire product. This is absurd and a waste of resources', he said. He emphasised that public consultations are a facade, as the comments submitted are practically never taken into account. Entrepreneurs feel that dialogue is no more than an empty act', he added.

Stanisław Kluza also emphasised that Poland should compete not so much on the level of taxation, but rather on the level of stability and simplicity of the system. ‘We do not need to have the lowest rates in Europe, but we should have transparent and predictable taxes. Taxpayers choose not only the place to invest, but also the place to live. A stable system and a friendly environment are just as important as the rates', he argued. Gwiazdowski referred to this issue. ‘Stability is not only about regulations, but also about their practical application. I once recommended to fire all officials at the Ministry of Finance and rehire half of them. Because the problem also lies with the people who create and interpret the law’, he joked, criticising the ‘revolving door’ between the administration and private consultancy companies.

He also drew attention to the role of the courts. ‘Even the best regulations are not enough if the judicial decisions are unpredictable. Investors need to be sure that in the event of a dispute, they can expect a fair and quick resolution’, he pointed out.

The discussion attracted a lot of interest, also from young people.

Foto: Michał łepecki

Necessary control of spending

MEP Anna Bryłka from the political party Confederation focused on the role of the European Union. ‘The European Commission wants to introduce new own resources, for example, a portion of the excise duty on tobacco, which would go directly to the EU budget. This limits the sovereignty of Member States', she warned. She emphasised that Poland loses out on such solutions. ‘After 2028, a serious gap in the EU budget is expected. Then the burden of new taxes will fall on Member States, which will lose control over their own income’, she said. She also criticised the EU legislative process. ‘Deregulation is a fashionable slogan, but in the practical terms it is not visible. The law-making process is long and complicated, and delegated acts open the door to lobbyists. This creates regulations that do not always serve the interests of citizens', she said.