Warsaw (Puls Biznesu) – On Monday, Sejm, the lower chamber of the Polish Parliament, holds a supplementary meeting to vote over the veto of President Aleksander Kwasniewski to deduct VAT paid in construction materials. However, the Ministry of Finance warns that it will raise excise duty for gas and oil by PLN 0.25 (EUR 0.06) a litre. “If President’s veto is overcome, we will have no other solution. We must find ways to make up for the PLN 4.5 billion loss incurred by the law in the years 2006 and 2007”, Jaroslaw Neneman, deputy Minister of Finance explained.
Opposition parties, which – according to polls – are doomed to win parliamentary elections held this fall, say there is no need to worry. “Higher excise duty is unacceptable when fuel prices are so high. Such an increase would disturb the economy, businessmen and citizens. If Citizens’ Platform (PO) rules after elections, we will correct the budget law and withdraw the price increase”, Zbigniew Chlebowski, one of PO leaders promised. According to Witold Modzelewski, former deputy Minister of Finance, higher excise duty would be dramatic for the economy. “PLN 0.25 a litre is a huge tax increase: 15 percent for gas and 20 percent for oil. The budget would get a cash injections of over PLN 4 billion a year. However, costs of companies would rise and their income fall”, he said.
The veto will be easily overrun because nearly all parties demanded to vote against it. The law was approved on July 8th with no single vote against it. If the presidential veto is overrun, since January 1st 2006, citizens will be able to regain part of VAT paid in construction materials bought after May 1st 2004 (the day Poland entered EU).
(PLN 1 = EUR 0.247)Poland/Economy/Taxes