That's an inevitable result of allowing people to trade in commodities that they never touch or even see. It happened with chocolate too several years ago.
I've just checked and Hungary has a 27% standard VAT tax?! Poland has 23%, but a hike is probably being discussed right now. Taxes kill the purchasing power and are usually wasted on short term programs that don't build a stronger economy. A lose - lose for citizens.
But the good news is that a church tax is being considered. If that comes in only people who want to fund a church will have taxes taken from them to fund any church.
@Lazarus Last year, how much did you pay towards funding a church in Poland? You obviously don't want to fund a church, but your post above may suggest you've been forced to?
@Korvinus Poland is following along the taxation stupidity that the US has been implementing since WW2 ended. There is no way to tax a country into prosparity. Thankfully the President has said he will veto some of these new taxes. The depositis on plastic and glass bottles will only help the homeless get more money for more alcohol, so its like giving them a pay raise.
They are not trying to tax their way to prosperity - rather trying to fill a worrying hole in the public finances caused mainly by lockdown.
Some of these taxes were proposed by PiS but now the President wants to block them and introduce his own crazy idea of zero PIT if you have two kids and earn less than 12k a month.
I din't think VAT will increase but they will work hard on reducing the exemptions
rather trying to fill a worrying hole in the public finances caused mainly by lockdown.
At least you're not doing as badly as Romania. Those idiots run a suicidal deficit of 9.3% of GDP, and are only planning to reach the EU target of 3% somewhere in the mid 2030s.
However, you are not far from France, which actually runs a slightly tighter ship than you (5.6% vs 6.1%). On September 8th their government will collapse, and borrowing costs will soar further. Yesterday they were at Italian levels (for the first time ever). In two weeks, they'll probably be at Bulgaria levels.
For the time being, the problem is more political in nature, but can quickly turn into a full blown crisis.
Francois Bayrou says that there is a very real possibility that France will need an IMF bailout, if the parliament doesn't support his cabinet's program. There's practically a 100% chance at this point that his government will collapse, since the Front National and Socialists have already said they won't help him.
I never thought I would read such a sentence in my life. FRANCE! A founding member of the IMF! A board member! The country that has supplied more IMF Directors than any other (Lagarde and Dominique Strauss-Kahn most recently) - will be bailed out by the organization.
Truly crazy times we live in.
But back on topic - Poles really are running a kamikaze budget. What on Earth were you thinking, putting together budgets that are €65Bn in the red?
There are no western politicians willing to be honest about the need for tax rises. And these rises must be borne by all - not just the rich, "bankers", tech companies etc but by Jan Kowalski too
Talking of bond yields
France 3.5 percent Poland 5.4 percent Romania 7.6 percent
Large gap
North Nigeria 13.5 percent
There is a ton of things wrong with public finances in the west since the crazy lockdowns but we are not due any lectures from the gas station with nukes. Or make that the gas station with no gas and broken nukes.
but we are not due any lectures from the gas station with nukes
Yes you are.
Russia represents a fiscal fortress. What really matters is our overall debt burden, which is tiny compared to both Poland and the United States (20% vs 50% and 120%).
The bond yields may seem extreme, but the primary driver for this is inflation (which is stubbornly above 15% in Russia since the war started).
This means that every year, Russia's debt becomes devalued by 15% in real terms. Since we don't need external rollover financing, we don't care if foreigners discount that debt. In fact, foreigners can't buy our debt anyway, because their governments forbid them.
Together, this means that every 7-8 years or so, we inflate away the lion's share of the previously accumulated debt.
Further, it may seem like paying a 15% coupon is very expensive, but you have to remember that the primary buyers for government debt in Russia are state owned banks and pension funds. We essentially have a captive buyer, that has no choice but to buy Russian bonds. Effectively, the government's left pocket, pays its right pocket - in the same way as happens when the Fed begins to buy trillions of dollars of Treasuries.
In short:
1) Russia has a closed capital account (meaning Ruble debt is trapped inside a domestic cage).
2) Russia has a tremendously healthy current account surplus from commodities (even as the ruble depreciates, the river of FX keeps flowing in).
3) We have a population that has little choice but to hold Ruble-denominated financial assets
4) This combination lets the state use inflation as a stealth tax, eroding liabilities quietly. What Novichok constantly brings up - inflation as a tax.
For the Kremlin, high ruble inflation is great, because it allows them to meet their obligations much easier. Each barrel of oil brings in more and more rubles, whereas pension and state salaries' growth do not keep up.
Pensions inflated away so the rock hard bread changes price every week, no foreign currency to buy nice stuff, nothing to invest in on the off chance you do have a few spare rubels
Sounds great for everyone except the "citizens", sorry "subjects", sorry the real word is serfs.
Pensions inflated away so the rock hard bread changes price every week
Pensions' and state salaries' growth has not kept up with inflation - true - so real income for many people has stagnated. But across the economy at large, wage growth has exceeded inflation.
Perversely, this is driving further inflation, because we have a demand side problem with inflation in Russia. People are earning more money than ever, and are trying to buy more goods than ever - but Russian industry can't keep up, whereas imports have been drastically curtailed.
no foreign currency to buy nice stuff
There's literally hundreds of billions of dollars of FX pouring in annually. The restrictions in place in 2022 are gone - you can buy as many dollars as you want. You can go, and get $10 million in new dollar bills, and no one will bat an eye. The problem is - there isn't much to buy with that FX. Europe and America won't sell to us, so everything is going to China. In a matter of years, the automobile market has become dominated by Chinese players - for example.
nothing to invest in on the off chance you do have a few spare rubels
Invest in government bonds (if you have a view on inflation going down), in equities, in real estate, in precious metals, into private equity, into private credit - whatever you want. So long as it's in Russia, or a country on the list of "friendly countries".
To be honest, I was in the camp of those people that advocated Russia must borrow like crazy, and run up our debt to at least 80-100% of GDP.
I wanted Chinese style investment into infrastructure at 25-30% of GDP. Use American and German money to build all the railroads, dams, and highways that our economy is in desperate need of. God knows we could service a debt load like that easily, with the money coming in from oil and gas (while the planet still needs it - one day the Klondike will be over).
But Putin, and the uber-fiscal conservatives around him, were and are allergic to foreign debt. He paid back the Paris Club ahead of schedule, and the IMF and World Bank - even though he didn't need to. He very carefully issued Eurobonds (which are now all in technical default), but preferred to rely instead on internal financing.
Maybe he knew he was gonna declare war on Ukraine all along, and that's why he kept us on some kind of debt hunger diet... but even that seems an erroneous explanation.
We still could have run up the debts, and then when he invaded Ukraine - those debts would be declared in default just like the small existing ones. It would be Western problem.
I would like to see Western politicians force write offs on their funds of not several hundred billion, but $2 Trillion dollars of Russian bonds. Haha! They would not do it. We might have been in a better negotiating position now, if we really ran up our debt.
@cms neuf The hole in the budget is not mainly from lockdowns. It is from too much 800+, too much money to Ukraine, and not enough regular tax collection. Eventually people are going to figure out that you cant cut taxes for some, and give away money to others, and still make budgets work.
Last year, how much did you pay towards funding a church in Poland?
Too much. Last I saw the state gave about PLN 9 billion a year to religious organisations, with 95% of that going to the Polish Catholic church. With Poland's total government expenditure being around PLN 1,067 billion, that would suggest that 0.84% of what I paid in total taxes (PIT, ZUS and VAT, plus excise and other taxes) went to religious organisations. I'd far rather have that amount in cash.
More or less the same as it costs to look after Polish kids
Actually it's less. Mostly because the lack of specialists able to diagnose kids who don't speak fluent Polish means that few of them get intensive (i.e. expensive) assistance provided to kids that speak fluent Polish. Also, and here I'm sharing the opinion of a Polish-Ukrainian child psychologist, Ukrainian parents are more likely than Polish parents to think their kids need a smack than professional assistance.
And these rises must be borne by all
No. Some people are already taxed quite enough. Today I saw a payslip with a gross amount of slightly over PLN 19,000 and a net amount of slightly under 9,000. Of course when that nine is spent, 23% of it will go as VAT, meaning the person gets goods with a value of 7,300 ish. And the 19k actually cost the employer about 23,200, as we need to add to that the employer's ZUS contributions. So, in exchange for work valued by an employer at 23,180zl that person gets goods valued at 31.5% of that amount and the government gets 68.5% of the dosh to do with as it wishes.
This only seems like a lot, taxes are always spent by the government which is the largest investor in each country. Moreover, governments produce debt, which means they spend even more. Which isn't necessarily a bad thing.
So you gave nothing. You paid general taxes, and the government allocated those funds at its discretion. You could claim your taxes paid for a convicted criminal's meals and shelter, and then I could claim you support convinced rapists. Stop playing the devil's advocate.
You didn't ask what I gave, you asked what I paid. I gave exactly as much as I would paid if I had the choice. But I didn't have the choice: the government took it from me and gave it to the Polish Catholic church.
That's f*cking insane.
Tell me about it. Very easy to see why so many Poles cheat on their taxes. (Personally I prefer to be annoyingly honest with the tax bastards: they expect everybody to cheat and somebody being too honest makes them think that the person is getting away with murder somewhere but they can't see where.)
