Friday, November 18, 2011

When the PM speaks...

There is a communist-era joke in Poland that goes something like this: "The Party never lies. When the Party speaks about taking something, it takes it. When the Party speaks about giving something, it speaks." Prime Minister Donald Tusk presented his economic plan for the upcoming future on Friday, but it remains to be seen whether this old saying will be proven true again.

Some already have named it "the most important speech since 1989." With all due respect, but does everything in Poland have to either be grandiose or total crap? Who cares if it was the best, worst, shortest or longest speech. This is not a figure-skating contest where you get points for "style."

The PM's line is that there is a crisis in the European Union (no shit Sherlock) and that in order to protect Poland painful steps are needed. This is a strange thing for the PM to say since only a few months ago he was waving Poland's GDP growth figure in Brussels to show off how resilient Poland is...but I digress.

So let's make a "joke forecast" here and assume that the old sayings do have the "power" to create reality. Based on the joke here is what the "old-new" government will actually achieve during this term:

Tax and fee hikes:
Let's not beat around the bush, if you "unify tax breaks" that means raising taxes, and this is high on the government's agenda. This means:
1. An increase in the disability tax on labour by 2 percentage points, let's think about who will cover the cost amid a crisis and rising unemployment?
2. Scrapping a tax break for the first kid for high-earners, as part of the pro-family policy of course.
3. Expanding capital gains tax to eliminate "tax-free" financial products.
4. Hiking tax on copper and silver deposits -- if you have any doubts about the potential impact, copper miner KGHM's shares fell 13 percent on the news.
5. Shale gas industry tax -- we don't even have shale gas yet and we are already taxing it.
6. Limiting the tax deduction for people producing copyrights (already mentioned on this blog).
7. Scrapping internet tax break.
8. Introducing healthcare fees for wealthier farmers.

Scrapping benefits:
Benefits for small, unpopular or, dare I say, non-core electorate groups will be scrapped, meaning prosecutors, judges and some coal miners can say farewell to their early pension benefits.

This is the list of things the government will talk, and only talk, about implementing for next four years:

- Healthcare system reform, unless "reform" means higher fees of course.
- Extension of retirement age to 67 for both men and women.
- Extension of retirement age for soldiers and policemen -- at the same time the government plans to improve Poland's defensive potential, so I guess this will not be built around people.
- Including farmers in the universal social security framework.
- Leaner and "client oriented" administration focused on performance.
- Less bureaucracy in construction permits.
- Opening up half of professions locked in by regulations, which means scrapping institutions like lawyers associations, etc.
- Fewer legal acts produced by the government but producing better quality legislation.
- Speeding up the judicial process in Poland. How? By cutting judges' benefits?

I agree with Scott. Should the government implement all of the above, especially the pension system unification and the inclusion of farmers into the universal social security system, Poland's public finances and, in general Poland, would be much better of. At least I would know that the tax hikes the government slapped on me were not in vain. But I guess we will see in next 13 months. If by then the government does not have the reforms ready and in parliament, it means we were duped...again.

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