The deposit and capital gain taxes should be abolished

11-03-2008, 10:09

Warsaw (Puls Biznesu) – Experts believe that levying the tax on income raised on the stock exchange will boost the economy. To levy the tax, however, the government needs to cut spending.

Stock investors are upset with Donald Tusk’s plans to abolish the so called Belka tax in two stages. In the middle of the term of this parliament, the tax paid for all deposit owners would be abolished, then, before parliamentary elections, the capital gain tax would be levied. The majority of economists believe that getting rid of Belka tax would boost the economy.

“The Polish tax system is too big. Every step aimed at limiting fiscal burdens should be supported. The capital market would become more attractive, which, according to theories, would increase the GDP growth”, Ryszard Petru, Bank BPH chief economist said.

In his opinion, lower revenues could be made up for with bigger income of listed companies and higher VAT revenues.

Without the tax, the Poles would be more eager to save money.

“Which in term would stop consumption and slow down inflation”, Mateusz Szczurek, ING Bank Slaski chief economist believed.

Experts, however, don’t like the idea to levy the tax in stages.

“If you resign from the tax in deposits, the banking system will be advantaged. The tax system should be neutral”, Janusz Jankowiak, Polska Rada Biznesu chief economist believed.

“Banks will offer special financial instruments aimed at avoiding this tax”, Mateusz Szczurek added.

“If the tax it to be abolished, it should be done in one move”, Ryszard Petru said.

The difficulty is that the budget will miss PLN 4.1bn (EUR 1.1bn) of the expected revenues this year. This is one seventh of the whole deficit. Economists advise that while Belka tax is cut, the government should cut spending at the same time.

Levying Belka tax was one of the main campaign slogans of the Citizens’ Platform. Four months after winning the elections, the government has not prepared a bill. The government has not an opinion on this. Jacek Rostowski, the Minister of Finance is against it. Prime Minister Donald Tusk wants to get rid of the tax in stages but his deputy Waldemar Pawlak stressed that the case should be discussed.

(PLN 1 = EUR 0.280)

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