The Polish government has announced a potential VAT rise from 22% to 23%.

When implemented, Poland will join a host of other European states which have been forced into VAT increases. These include: Greece, Portugal, Hungary, Spain, Finland and Romania and the UK.

They certainly haven't got it right like the Japanese have. 6% income tax and 5% federal tax on any good you purchase. It makes sense, you control your spending and what you need. It taxes those that are greedy and feel the need to buy too many things.

Poland's central bank will need to hike interest rates after the increase of value-added tax as the move could be inflationary, the connection between a VAT increase, price rises and rate hikes are obvious. The NBP will be dealing with a higher inflationary risk and they will be forced to react.

why such surprise? welcome in the EU... :D

Belka will be sure to stuff it up and Kommie will rubber stamp it :(

Welcome to the EU indeed :(

Its has nothing to do with the EU. Poland has to work on the deficit, they are caught between a rock and a hard stone. If they sit and do nothing PL Gov increases the deficit and PIS gets out the stick,if they increase Vat and employee tax more voters are turned against them. It will be interesting to see how the next six months pan out.

Tusk to the rescue! He'll put it up to 24% and then, somewhat heroically, announce a cut to 23%. What a genius he is!

The economy is not as strong as PO are making it out to be. You only have to look on the street and see the amount of shops that are closing down. Historically the zloty strengthens in July and weakens in late Aug/Sept when the holiday season slows down, its all about feel good factor for those traveling abroad. Any increase in VAT/Tax will not come in until 2011,if PL Gov have to put a austerity plan in place in order to bring down the deficit how far can they go before they loose all chance of re-election. Being A political I would prefer to dwell on the positive of both PIS and PO, Tusk did a good job during the floods and he has not had the easiest "premier".

Well, economics contains many principles, one of which is the domino effect. If other economies are not flourishing then there is no way that Poland's will, ceteris paribus.

The harmonisation/streamlining drive is gonna take Poland away from a fiscal course that it has been accustomed to. Just look at how Poland had to turn things around at the collapse of communism. Now it will just be dictated to. Brits used to feel that 17.5% VAT was high but 23%, well....

Let's face it, many are not happy with public services here and haven't been for some time. A 1% increase in tax isn't gonna make a jot of difference, it'll just appear as a slap in the face for those that are already paying too much tax. People will begin to wonder what they are getting for their money.

Just curious, as I may be moving to Poland in the near future...In the USA we pay 6% sales tax in my State. If I purchase something in a store (Except food and certain clothes) and it costs $1.00 , I would pay $1.06 , which includes "Tax".

How does VAT work? Would my $1.00 purchase be $1.23 ?

Thanks in advance!

Czesc

They should cut spendings instead of increasing VAT.. ehh I'm disappointed ;o

No, not quite. It's already part of the purchase price - the price you see is the price you pay.


Well, VAT does a great job of that too - it's a tax on consumption and an indirect tax, which people ultimately prefer. PO are right whent hey say that it's the least painful way - people who must have luxuries will be taxed, while those who need protected won't really see any difference whatsoever as it won't be levied on essential goods - or at least will be kept at the 3/6% level rather than 23%.

It's worth noting that as part of this proposal, lawyers and doctors will be forced to issue proper VAT receipts for the first time. The 1% increase is only temporary as well.

Has everyone forgot what Tusk was saying a month ago ?

The prospect of higher prices and belt-tightening in the UK are threatening to blow the high street recovery off course, leading retailers have warned.Next homeware stores are beating sales targets Fashion chain Next and flooring specialist Carpetright believe the outlook for consumer spending remains poor.Next's share price dropped about 7% - the sharpest faller on the FTSE 100 - after highlighting public spending cuts and looming tax rises as key threats to confidence in the sector.

Merged: New VAT Tax Increase from 22% to 23%?

Hi all did i hear correctly today that VAT or consumer tax is going to increase in Poland from 22% to 23%??

yup, that's the governments way of ringing in 2011. bend over and take it.

Obviously Tusk figures that consumption levels will stay at much the same level so it will generate more revenue for the government to pay off all that debt that will inevitable follow. Make the poor poorer is his game.

You keep people poor with a consumption tax?

No no no. I meant the IMF Belka route will cripple Poland in the future. The consumption tax will encourage people to be more responsible, like in Japan. They have an income tax rate of 6% but a federal tax of 5% which means that you control the level of tax you pay.