Poland’s tax burden for individuals and families dropped relative to other countries in the European Union last year, according to PwC, a consultancy.
In the latest version of PwC’s ranking, Poland is 14th in the EU in terms of how much of their income individual taxpayers keep after deducting taxes, as well as social and health insurance. That marks a rise from 16th place in 2019 and 17th in 2018.
Individual taxpayers in Poland are able on average to keep 72% of their net salary after deductions, compared to 73% across the EU as a whole.
The member states with the lowest burden on such taxpayers were Cyprus (where people kept 88% of earnings after deductions), Estonia (84%) and Spain (80%). The countries where individuals pay the largest share of their income in tax are Belgium (63% left), Germany (62%) and Romania (59%).
Source: PwC
According to PwC, Poland moved up the ranking as a result of a reduction in the lowest income tax rate from 18% to 17%, as well as an increase in the tax-deductible income amount from 1,335 (€291) to 3,000 zloty (€655).
Compared with the OECD average, Poland’s public finances have a higher share of social security contributions (at 37% vs 26%) and consumption taxes, including VAT and excise (at 37% vs 33%), but a notably lower share of income and business tax (at 21% compared with 34%).
In terms of disposable income for families after subtracting taxes, Poland ranked 17th in the EU, which marked a rise of two places from the previous year.
In Poland, families had 77% of income left, compared with an EU average of 79%. At the top of the ranking were Ireland, the Czech Republic and Estonia (all on 89%) and the bottom three places belonged to Denmark (71%), Lithuania (64%) and Romania (59%).
Source: PwC
The Polish government is due to unveil a range of tax reforms later this month as part of its “New Deal” package for post-pandemic recovery.
The planned changes are reported to include a more progressive income tax system that will raise taxes on the wealthy as well as prevent some people from switching to sole proprietorship to pay lower taxes.
The reform package is also expected to include an increase in the income-tax-free allowance to 30,000 zloty (roughly €6,500) and no income tax on pensions up to 2,500 zloty (€550).
Main image credit: adnovak/Pixabay (under Pixabay License)
Maria Wilczek is deputy editor of Notes from Poland. She is a regular writer for The Times, The Economist and Al Jazeera English, and has also featured in Foreign Policy, Politico Europe, The Spectator and Gazeta Wyborcza.
