Warsaw, 26^th April 2019

 

Experts debate the digital tax

 

The Union of Entrepreneurs and Employers organised a Round Table debate dedicated to the digital tax. The event’s guest of honour was Matthias Bauer, leading expert of the European Centre for International Political Economy.

On 26^th April 2019, at Kafe Zielony Niedźwiedź, a meeting dedicated to the concept of digital tax was organised by the Union of Entrepreneurs and Employers. Representatives of the digital industry and the Union of Entrepreneurs and Employers, as well as Matthias Bauer, an expert of the European Centre for International Political Economy, the author of the report “Digital Companies and Their Fair Share of Taxes: Myths and Misconceptions” participated in the Round Table debate.

The meeting began with a presentation by Matthias Bauer on the main conclusions of his report. According to the expert, the corporation taxation system must undergo a thorough reform, but new forms of sectoral taxes are not the solution to the problem. He pointed, among others, to the fact that entrepreneurs from the digital industry often pay a higher effective income tax rate than companies from “traditional” business.

“The effective tax rate we consider ‘honest’ aside, the introduction of a sectoral tax aimed only at companies in the digital industry, no matter how we understand it, is a completely wrong solution,” said Bauer. “Corporate taxation system must be changed, but its main problem at the moment is its excessively high level of complexity, and additional levies for specific industries only deepen this problem.”

After the short presentation, the discussion began. As Marcin Nowacki, the Union’s Vice-President, emphasises, key conclusions from the ECIPE report coincide with the position of Union of Entrepreneurs and Employers.

“Furthermore, we believe that the digital tax is no solution to the problem of tax avoidance,” added Nowacki. “Both we and our think tank, the Warsaw Enterprise Institute, are in favour of a general, not sectoral, approach to taxation. In our view, a revenue tax would be the optimal solution.”

In the course of the discussion, Matthias Bauer emphasised that there is no rational reason why the new tax would only concern one, individual group of companies. The digital tax alone would not only be unjust, but would also be one of the obstacles to the development of the digital industry in Europe, making it difficult to build the Digital Single Market.

“Of course, taxation is a natural element of a modern state’s functioning, because various public services are financed from taxes,” Bauer stressed the fact. “But in the light of the available data on CIT inefficiencies, it is quite reasonable to ask whether we still need corporate income tax at all? It seems the answer to this question is ‘no’, while the depletion of the state’s revenue would be offset by lower expenditures or additional inflows from other sources.”

 

Fot. geralt / pixabay.pl

Warsaw, 17^th April 2019

 

Poland urgently needs an Energy Doctrine

 

The current state of affairs as well as the prospects for development of the Polish energy sector is our biggest problem in the context of the competitiveness of our entire economy. Failure to address issues and lack of strategic thinking dangerously bring us closer to a systemic recession and decline in the standard of living. Poland urgently needs an energy doctrine that takes into account the processes taking place globally, not just politicians’ wishful thinking. This is the conclusion of the latest report by the Union of Entrepreneurs and Employers “Assumptions for the Energy Development Strategy in Poland”.

The essential condition for improving the business environment in Poland is to create a political consensus around a long-term programme of energy transformation. Without it, one cannot debate a long-term energy transformation of Poland. To ensure stable and competitive energy prices for the Polish industry, a gradual process of generation source and transmission line privatisation is imperative, which will force state-owned producers to adapt their actions to the market.

A four pillar doctrine

1^st Pillar. Change in ownership structure and diversification of generation sources. Systematic replacing state-owned power-generating consortia with privately owned dispersed energy sources. Gradual reduction of the solid fuel share in order to ensure that coal-based power in 2030 accounts for 50% of the Polish energy mix, while the other half is obtained from renewable sources and gaseous fuels. If nuclear power is to join the energy mix, it definitely can only happen after the year 2030.

The largest and newly built coal blocks must remain in the hands of the state, although they will only provide 30-40% of the highest domestic demand. While the 400 kV and 220 kV transmission lines will remain in the hands of the state for many years, the remaining part of generation sources and transmission lines (revitalised 200 MW blocks), wind farms, energy from gas and waste, photovoltaic power, together with 110 kV lines, medium and low voltage lines should be privatised and subject to free market mechanisms.

2^nd Pillar. Coal remains an important source of energy. What changes are the strategy of mining and the importance of the resource itself. This means limiting the extraction to profitable deposits, taking into account the necessary mining investments. Conventional coal-fired energy is only to guarantee electricity supply in the event of a system collapse or increased demand.

3^rd Pillar. Development of renewable energy sources as part of a nationwide policy for the development of dispersed sources. The need to optimise and increase energy efficiency, with the simultaneous risk of further increases in energy prices, make RES investments increasingly commonplace and desirable. Regional programs should be launched and decisions concerning the development of dispersed energy sources should be transferred to local communities, with a nationwide support system for regional initiatives and the assumption that the support period ends after 15 years. The support period can be differentiated for individual technologies.

4^th Pillar. The state must still be responsible for electricity supply. This does not mean, however, that it must be the owner of all generation sources and all transmission lines. Strategic generation sources and strategic transmission lines may, but do not have to, remain in the hands of the state as the guarantor of the country’s energy security. Ultimately, the role of the state must be reduced only to the creation and supervision of energy policy.

Pursuant the above-mentioned assumptions, the Union of Entrepreneurs and Employers recommends the following:

• Rapid implementation of the energy mix changing policy. Gradual reduction in the share of solid fuels, share increase of renewable energy and increasing the share of gas fuel, mainly as a regulator of renewable sources. Within a decade, we should reach the level of 50% in the balance of energy production from gas and renewable sources, and 50% from carbon sources;
• Determining and disclosing domestic black coal resources based on the economic availability of this raw material. Comparison of the national production potential with import possibilities, in terms of prices, dates and delivery guarantees;
• Development of investment plans for coal-fired power plants and mining, based on 50% coverage of the maximum system demand;
• Limiting the operation of lignite blocks until 2030 and replacing them with renewable energy sources, gas blocks, and in the post-mining areas as part of the reclamation of these areas, construction of pumped-storage hydroelectric units;
• Presenting the energy doctrine programme to the European Commission, obtaining acceptance and negotiating free CO₂ emissions, justifying the necessity of executing a comprehensive transformation over a longer period of time;
• Enabling the fastest possible development of cross-border connections both with EU member states and the closest neighbours;
• Privatising distribution companies in order to force state-owned tycoons to adapt their operations to the market by means of stock exchange instruments, while maintaining state supervision;
• Allowing market players to freely trade in energy, both from domestic sources and imports from any direction;
• As a result of legislative simplification, intensive development of public-private partnership in local governments in the area of launching energy and heat generation sources and creation of local transmission networks;
• Legal regulations enabling the development of energy clusters and cooperatives;
• Intensive development of a small individual energy programme through a system of incentives for recipients as well as through preferential investment conditions in this field;
• One ought to consider the transfer of the Polish programme for nuclear power plants construction to the areas where lignite power plants are gradually decommissioned;
• The decision to build offshore wind farms should be made as soon as possible and to facilitate these investments a separate legislative path ought to be created;
• An immediate return to supporting the development of onshore wind farms which are the cheapest electricity generation source;
• An efficient and reasonable support system for photovoltaic sources should be implemented as soon as possible.

17.04.2019 Report by the Union of Entrepreneurs and Employers: Assumptions for the Energy Development Strategy in Poland 

Warsaw, 24^th April 2019

The Union of Entrepreneurs and Employers presents a substantive education system reform proposal to the Social Dialogue Council

In the face of recent discussions and negotiations centred around the teachers’ strike, conducted among others amongst social partners whose representatives sit on the Social Dialogue Council, the Union of Entrepreneurs and Employers reminds the public opinion of its publication under the title “School for life. Who will pay for our pensions?”. Since the Union perceives the education system as one of the key elements of the future of the state and the economy, we prepared a comprehensive program of reforms aimed at bringing pupils and parents back to their central role in the system.

“Sole discussions about pay issues themselves, or even more so about the formula of debeta about education, seem to be completely unproductive” emphasises Cezary Kaźmierczak, the Union’s President. “That is why we came up with the proposal that our document be the starting point for the debate between the authorities in power and their social partners.”

The education system reform program as proposed by the Union of Entrepreneurs and Employers assumes a thorough reform of the financing model and of the functioning of schools. The document stresses that the “money follows the pupil” principle is not being implemented at the moment, which significantly hinders the introduction of competition mechanisms between schools. The system of awarding educational subsidies is complicated and does not reward the best institutions, and the freedom of financial management of schools is significantly limited by rigid remuneration of teachers set out in the Teachers’ Charter. The Union postulates the liquidation of this harmful law and removing the cap on teachers’ salaries, so that the best can earn much more than they do at the moment. Schools, according to the Union, should be managed by special not-for-profit companies with their own budgets and supervisory boards, which should include representatives of parents, teachers, the local community as well as local entrepreneurs. This way, schools will be able to compete for pupils with each other. According to the Union, it is the lack of competition that led to such a pathological situation in the Polish education system.

“We believe that teachers rightly claim that they earn too little, but their postulates themselves are not right” says Cezary Kaźmierczak. “The point is not to put a different amount of money in the Teachers’ Charter. Even if we do that, the problem will come back to us anew in a few years. The idea is to liquidate the Charter and thoroughly reform the system, so that all teachers can negotiate their terms of employment independently.”

Therefore, in line with the project of the Union of Entrepreneurs and Employers, real supervision over education is transferred to local communities and parents. We believe that these groups together with pupils should be at the centre of the system – not government officials. Only when institutions compete with each other for pupils, the best teachers will be rewarded too.

The report “School for life. Who will pay for our pensions?” was presented to the partners sitting in the Social Dialogue Council as a starting point for further debate on the education system in Poland. The Union of Entrepreneurs and Employers expects a substantive debate regarding the postulates presented in this document, and not subsequent tests of strength taking place at the expense of Polish pupils.

 

Agenda Poland: School for life. Who will pay for our pensions?  

 

Fot. geralt / pixabay.com

4^th April 2019

High non-wage labour costs, high taxes, and excessive bureaucratic obligations – according to entrepreneurs these are the biggest barriers to running business in Poland

High non-wage labour costs, high taxes, and excessive bureaucratic obligations – these are the obstacles considered most harmful for running a company in Poland. These are the conclusions from a survey conducted by Maison & Partners on behalf of the Union of Entrepreneurs and Employers.

It ought to be emphasised that the survey beginning with this edition is carried out on a different business base (previously the database of the Union of Entrepreneurs and Employers, presently of the Ariadna National Research Panel). The sample structure in terms of the size of the companies surveyed in this measurement and the previous ones does not differ, but the demographic structure of respondents has changed considerably. This change may be to a large extent the effect of methodological modification and not of actual differences in the perception of barriers in recent years by Polish entrepreneurs.

The Union of Entrepreneurs and Employers once again asked entrepreneurs from the SME sector about the biggest obstacles for business activity in Poland. In the catalogue of the largest barriers, one can find the following:

Maison & Partners for the Union of Entrepreneurs and Employers, January 2019, N: 733, survey conducted among a group of the SME sector companies representative in terms of workforce size (up to 250 employees).

The most commonplace barriers are a much bigger problem for microenterprises than companies with a larger workforce, as well as for enterprises from the services sector than those from trade and production.

Entrepreneurs arranged the above barriers, pointing out those they considered most challenging in terms of running a business. On the TOP2 barriers list, there are high taxes (57%) and labour costs (52%).

According to the presented data, 88% of respondents consider unclear legal provisions as a definitely essential barrier to the development of enterprises in Poland. Subsequently, administrative requirements (87% of respondents) and lack of financial resources (86% of respondents) are considered equally harmful in this respect.

“It is indeed worrying that the catalogue of barriers to conducting business, which entrepreneurs consider the most challenging, is basically not changing,” claims Cezary Kaźmierczak, president of the Union of Entrepreneurs and Employers. “From the very beginning, the most annoying factors in view of entrepreneurs are the tax system, labour costs, bureaucracy and a complicated, unstable regulatory environment. And we must remember that micro-entrepreneurs experience these problems much more intensively than larger entities. We have published countless reports and positions on each of these topics and we see some changes going in the right direction, but it is still too little and too slow.”

64% of people asked about the most important reasons for not employing more people in small- and medium-sized enterprises pointed to the lack of financial resources, for example, too high employment costs.

Too low profits caused by the lack of financial resources are also a major obstacle for small- and medium-sized enterprises to invest their capital. As many as 48% of respondents say so.

Lack of financial resources is also perceived as the biggest obstacle at the start – almost half of Polish entrepreneurs (47%) believe that the lack of money is the main barrier to starting their own business.

Due to the fact that the above-mentioned lack of financial resources is considered by entrepreneurs to be the greatest obstacle to starting their own business, it is the state’s financial aid according to entrepreneurs (53%) that could encourage them to establishment their own businesses. Another important incentive would be an extended payment period of the preferential social security premium according to 43% of respondents.

“I would recommend the government to have a good look at this study instead of inventing ‘entrepreneur’s tests’ and limiting the possibility of making use of the flat tax rate when self-employed. Improving the business environment will serve everyone and I can guarantee that the state budget would quickly feel the results thereof,” concludes Cezary Kaźmierczak.

 

04.04.2019 Survey by the Union of Entrepreneurs and Employers: Barriers to running business activity in Poland

 

Fot. geralt/pixabay.com

Warsaw, 2^nd April 2019

Most opponents of the trade ban… in small towns and among people who work… in trade

The Maison&Partners research house carried out yet another wave of the survey commissioned by the Union of Entrepreneurs and Employers concerning the attitudes of the Polish people towards the Sunday trade ban. The general conclusions from this wave’s results remain the same as those based on previous editions of the study. Restrictions have the highest number of opponents among residents of small towns, as well as among people working presently or in the past in the trade sector.

In the latest wave of the survey, one can observe a certain increase in the percentage of respondents positively assessing the solutions from 2018, that is two trade Sundays a month. People declaring that they are assessing these regulations rather or definitely positively constitute 45% of respondents. In November 2018, there were 43% of them which means an increase of two percentage points.

“We can clearly see that people, recognising how burdensome the regulations already in force are and how annoying the total trade ban might be beginning in 2020, more favourably evaluate what was last year and that’s two trade Sundays a month,” claims Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers. “This is not at all surprising. In view of the most restrictive regulations that are to come into force next year, those softer restrictions look much more rational.”

The percentage of people who in any way support the solutions in force in 2019 amounts to 37% and is four percentage points lower than in the first wave of the survey, which was carried out in November 2018. The same is true of the percentage of supporters of next year’s regulations: the ban on trade on all Sundays. It comes to 32% of respondents, while in November 2018 that was 35% of respondents.

The less critical evaluation of the 2018 solutions is reflected in the number of opponents of any restrictions on trade, which has decreased somewhat. At the same time, the percentage of opponents of regulations in force in 2019 and planned for 2020 remains the same: roughly half of Poles are against these solutions. The number of supporters of the Sunday trade ban also dropped – from 31% in November 2018, to 26% in the current edition.

“As for the structure of the group of opponents of the Sunday trade ban, the trends remain unchanged,” emphasizes prof. Dominika Maison. “We still see that the percentage of people critical of the enforced regulations is higher among residents of small towns and among people working in commerce. We have noticed this since the first wave of the survey and nothing has changed in this respect in the latest edition.”

What is interesting is that the March measurement shows once again a decline in the percentage of people who consider the Sunday trade ban as one of the two best decisions of the current government. This regulation is increasingly perceived as negative in the light of other actions undertaken by the Law and Justice government.

 

02.04.2019 Survey by the Union of Entrepreneurs and Employers: Attitudes and opinions regarding the restrictions on Sunday trade – wave 4

 

Fot. brian/flickr.com