Warsaw, 6^th November 2018

 

The outflow of immigrants from Ukraine to the West is a real threat to the our economy – Poland may lose up to 1.6% GDP

 

Poland faces a real problem related to the risk of a significant economic slowdown, which may be caused by the outflow of over half a million workers from Ukraine to Western Europe. According to experts of the Union of Entrepreneurs and Employers, avoiding such a scenario will be possible if a coherent migration policy is created, largely with a wise absorption of economic migrants from proven directions in mind.

This topic was discussed in a broader context in the memorandum titled “The worst case scenario takes place – will Poland lose employees from Ukraine to Germany”, presented by the Union of Entrepreneurs and Employers on November 6^th this year during a press conference.

“We are anxiously observing the situation related to the insufficient supply of labour in Poland, and hence the related lack of workforce, which is increasingly often publicised in nationwide media. Since 2016, we have been calling for a coherent migration policy with procedures for employing Ukrainian citizens simplified to the maximum extent, as well as from other nations whose representatives are already working in Poland and contributing to the creation of GDP,” says Jakub Bińkowski, Secretary of the Law and Legislation Department at the Union of Entrepreneurs and Employers.

In his view, the next step in the economic context related to taking care of shortages on the labour market is to create a transparent path to obtain the right of permanent residence, and later citizenship for immigrants from countries east of the Polish border.

As one can read in the Union’s memorandum, “according to the estimates of the National Population Council, by 2050 Poland should receive 5 million economic migrants to maintain the current pace of economic development”.

Experts of the Union of Entrepreneurs and Employers agree that the continuation of the good economic situation will not be possible thanks to only short-term actions consisting in satisfying the country’s current needs and attracting immigrants for a short time, for example, due to the seasonal increase in labour demand.

“Virtually all EU member states, suffering from significant shortages of the working age population, are facing an analogous challenge. This is a very big threat not only to the current pace of economic development, which must decrease in a situation when fewer and fewer people are working, while more and more are on pension benefits, but it is also a threat to the stability of the pay-as-you-go pension system, and consequently – the situation of state budgets,” comments Tomasz Wróblewski, President of the Warsaw Enterprise Institute. “It is then no wonder that other European countries are very keen on acquiring a large group of immigrants taking up paid employment who assimilate easily.”

The introduction by Western countries of visa-free travel for workers from Ukraine, effective from 11^th June 2017 (Ukrainian citizens do not need visas to enter the EU, this entitlement has been limited to 90 days over a period of 6 months, and trips can take place on business, tourist and family purposes), caused that in the first month of the new regulations being in force, the EU border was crossed visa-free by over 95,000 Ukrainians. At the same time, the dynamics of economic migration to Poland from the Eastern direction dropped significantly – data from the Ministry of Labour and Social Policy show that in the first half of 2018, 13 percent fewer statements were registered concerning the intention to entrust work to a foreigner compared to the previous year, which is a reversal of the trend from the last few years, i.e. in principle a continuous increase in the number of registered declarations.

“The Union of Entrepreneurs and Employers for many months presented its recommendations regarding the creation of a programme aimed at retaining economic migrants from Ukraine and other eastern countries in Poland. Unfortunately, we state with concern that Germany today is preparing to open its market for employees from outside the European Union. The German government wants to increase the inflow of qualified labour force while adjusting it to the needs of the labour market – the overriding objective here is to secure employees with vocational education,” says Katarzyna Niemyjska, Director of the Law and Legislation Department at the Union of Entrepreneurs and Employers. “Germany, as a result of a quick and simple procedure, is to recognise qualifications acquired outside the EU, to carry out extensive promotional activities encouraging people to work in Germany, and to offer support in learning the German language.”

The implementation by the Germans of the plan they presented will have a particular impact on the Polish economy. It can be assumed, and there are studies on this subject, that a large part of workers from Ukraine staying in Poland will decide to move to the West. This means an outflow to Germany of a large part of the labour force we need, which will cause great difficulties for entrepreneurs, but also macroeconomic problems. According to the Union’s estimates, in a moderate scenario assuming the outflow of 500,000 immigrants from Ukraine from the labour market, the potential GDP loss will amount to 1.6%, which is equivalent to 1/3 of the GDP growth dynamics in 2017. In the context of the imminent economic slowdown, this loss would be even more severe.

According to the Union, there is need for urgent governmental activity aimed at the implementation of measures to prevent the situation when a significant shortage of workforce in Poland becomes a fact and significantly affects the situation of entrepreneurs who will have difficulties conducting their businesses with a large number of job openings, while consumers will have to pay more for the same services and products. As a result, the state will also lose, because Ukrainians spend their money in Poland and their wages are normally taxed.

 

Memorandum of the Union of Entrepreneurs and Employers – “The worst case scenario takes place – will Poland lose employees from Ukraine to Germany”

 

 

Fot. skeeze/pixabay.com

Warsaw, 30^th October 2018

 

Polish Federation of Food Industry becomes member organisation of the Union of Entrepreneurs and Employers

 

The Polish Federation of Food Industry Union of Employers joined ZPP – the Union of Entrepreneurs and Employers. The organisation was established to ensure effective participation of business entities in creating legal, organisational and economic conditions for the development of the food sector – one of the largest and strongest branches of the Polish economy. PFFI members are leading companies and organisations present on the broadly understood food market in Poland. For many years, the Federation has been helping its members build their strong position on the market. Companies associated in PFFI employ 40,000 employees.

PFFI bases its activity on three basic pillars:

• Organisation – only by acting together, companies can effectively represent their positions,
• Cooperation – creating a unique platform for cooperation between companies,
• Influence – PFFI representatives actively present positions and opinions developed in the working committees of the Federation.

Poland’s integration with the European Union set new challenges for Polish enterprises. Since 1999, the Polish Federation of Food Industry Union of Employers is the only Polish organisation that has membership status of the largest organisation of EU’s food producers, the Confederation of Food and Drink Industries of the EEC (FoodDrinkEurope).

PFPŻ represents the Polish food industry at the institutionalised forum of the entire food industry in the European Union. It monitors and informs affiliated companies about any and all changes in EU food regulations, and since 2004 it enables Polish enterprises to actively participate in shaping them.

 

Fot. rawpixel/pixabay.com

Warsaw, 29^th October 2018

 

The fight again the tobacco grey zone

 

Smart excise policy, regulatory solutions that tighten tobacco cultivation and drought trading regulations, as well as intensified operations by authorities – these are the factors that made it possible to reduce the grey zone of tobacco products by around a half over the last 3 years – according to the fourth Business Paper of the Union of Entrepreneurs and Employers.

According to common knowledge, the grey economy is a very unfavourable phenomenon for the economy. Particularly vulnerable to fall victim to it are those sectors where non-compliance pays off best and unpaid taxes are highest. One such sector is the tobacco market. High increases in excise tax on cigarettes resulted in the fact that in 2011, excise duty per an average packet of cigarettes amounted to about PLN 6, in 2015 it was already more than PLN 8. The VAT burden also grew along with excise duty increases. Those high tax increases were not accompanied by an increase in budget revenues, which, on the contrary, were decreasing.

“Up until 2015, the government in spite of our clear warnings, stubbornly increased the excise duty on cigarettes, although it was obvious that it would not result in higher revenues,” says Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers – ZPP. “There was less and less money from tobacco excise, while the grey zone grew unchecked, from 13.9%. in 2011 up to 19% at its height in 2015. This clearly affected the legal cigarette market, which in this period shrunk by a quarter.”

At the same time, no significant legislative initiatives to tighten the system took place. Point measures were carried out, such as the taxation of dried tobacco with excise duty, but they were completely inadequate.

“The legislator’s limited activity definitely contributed to the increase of the informal economy until 2015,” says Marcin Nowacki, Vice-President of the Union of Entrepreneurs and Employers. “One would react to threats in a completely inadequate manner, introducing small, singular changes, limiting the effects of negative phenomena on the market such as, for instance, the once popular “party cigars”, but it was a drop in the ocean of needs. As a result, the grey zone of tobacco for smoking reached the level of up to 60% of the market volume.”

According to the Union’s estimates, in the years 2011-2015, the Polish state budget lost due to the tobacco produce grey zone as much as approximately PLN 25 billion in revenues.

In 2015, however, a significant change in policy took place that went beyond a simple correction. First of all, the excise tax hike was stopped. One ought to make note of the fact that in Poland it exceeds the minimum levels required by the European Union.

“For years, we have been repeating that further increases in excise tax on cigarettes will do no good, and they will even be counterproductive. The authorities eventually took it into due consideration and gave up the nonsensical increases, the result of which was visible almost immediately,” said Cezary Kaźmierczak.

Nevertheless, merely stopping the increases would not bring satisfactory results. It was necessary to take legislative action and this was precisely what happened. A number of duties and regulations were introduced regarding intermediary tobacco operators, excise security, as well as monitoring of both crops and raw tobacco trading. An obligation for all producers of raw tobacco to register themselves in a special registry was introduced.

“It turned out that it was possible to tighten the system in a regular and organized manner,” emphasises Marcin Nowacki. “Moreover, reconnaissance and operational privileges were granted to customs services, which led to the fact that in 2016, five times more illegal cigarette factories were closed down than in 2014.”

The results of the activities carried out, both in terms of excise policy, as well as legislative proposals and changes concerning authorities, are all very positive – the share of informal economy in the cigarette market fell by 6.7 percentage points, while legal market grew by almost 3%, revenues from tobacco excise duty increased by PLN 1 billion a year. Thus, we managed to reverse all negative trends caused by misguided policies of previous years.

Despite the policy’s good results, the threat of the grey zone is still real, as new risks are already on the horizon, such as the ban on the sale of menthol products. Both those products and the recommendations of the Union of Entrepreneurs and Employers in this scope will be discussed in a comprehensive report, the publication of which is planned for November this year.

 

29.10.2018_Union of Entrepreneurs and Employers Business Paper_The fight again the tobacco grey zone

Warsaw, 26^th October 2018

 

Commentary of the Union of Entrepreneurs and Employers on the adoption by the Polish Sejm of the Act introducing the third income tax threshold and eliminating the flat tax for business and the introductory law of the so-called exit tax

 

On 23^rd October 2018, the Sejm of the Republic of Poland voted on and adopted the government bill amending the act on personal income tax, the act on income tax for legal persons, the act – Tax ordinance and some other acts (document no. 2860) and the government bill on the Solidarity Support Fund for the Disabled (document no. 2848).

Both projects were subject to thorough criticism of many participants of public consultations, including ZPP – the Union of Entrepreneurs and Employers. The first of them assumes the introduction to the Polish tax system of a number of changes of very important character for business entities related to, among other things, the issue of reporting tax schemes or changes related to the tax law circumvention clause. With these are actions, the legislators intended to tighten the tax system and increase the budget revenues, but in practice they may be dangerous for taxpayers. Moreover, as part of the project, the legislator introduces the so-called exit tax, according to which income from unrealised profits would be taxed. This means a de facto taxation of an asset transfer out of Poland, as a result of which the Polish state loses in whole or in part the right to tax income from the sale of this asset, as well as the change of tax residence, as a result of which Poland loses in whole or in part the right to tax income from the sale of an asset owned by the taxpayer in connection with the transfer of his place of residence to another country.

This is a solution resulting, to some extent, from the ATAD directive – however, the Polish legislator decided to implement the provisions in a stricter manner with respect to the minimum requirements set out in the directive, including taxation also for individuals who do not run a business.

It is noteworthy that the adopted project was separated from a larger project, which had previously been the subject of public consultations and contained a number of other solutions, including preferential taxation of income from intellectual property rights or a change in the tax settlement of lease instalments costs. In the course of consultations, the Union of Entrepreneurs and Employers submitted a critical position to the project, highlighting some of the unfavourable solutions, and criticising the fact that the Polish legislator decided to implement the ATAD directive in a hurry, making the consultation process essentially illusory (only two weeks to submit comments to a very extensive project, while consulting the new Tax Ordinance at the same time), although the time for transposition does not pass until the end of 2019. Our position in this respect remains unchanged – we strongly oppose the introduction of the new tax solutions, so deeply interfering with taxpayers’ interests, in such a short time, without taking into account any of the comments made in the course of public consultations, and without an in-depth analysis or discussion of CJEU jurisprudence concerning the exit tax concept and its influence on the final shape of Polish regulations.

During the same plenary session, a second bill was also passed – on the Solidarity Support Fund for the Disabled. This fund is to be financed from contributions levied on employees’ remuneration and a new tax at the rate of 4%, whose taxpayers will be persons with annual income of at least PLN 1 million. It is worth noting that the amount of the said contribution has not been specified in the Act – it is to be determined on an ongoing basis in the Budget Act. In fact, the Polish legislator, under the pretext of creating a new Fund (largely identical with the existing PFRON – State Fund for Rehabilitation of Disabled People), decided to increase non-wage labour costs (what is worse – in the amount not permanently specified in the Act), as well as the liquidation of the linear income tax from business activity and the introduction of a third tax threshold at the level of one million zlotys. The Union of Entrepreneurs and Employers has already strongly criticised this idea several times, pointing to its anti-development character, as well as the danger of introducing far-reaching changes in the future, aimed at creating a progressive system of income taxation in Poland.

To sum up, on 23^rd October, the Polish Sejm adopted two bills introducing significant changes that are unfavourable for taxpayers. As is clear from the voting information, unfortunately, only a few MPs opposed these initiatives, which we leave for consideration in the context of the upcoming parliamentary elections.



Fot. Photo RNW/ na lic. Creative Commons/ flickr.com