Warsaw, 21^st August 2020

 

Position of the Union of Entrepreneurs and Employers on the Polish nuclear power programme

 

Nuclear energy is considered to be a promising branch of the entire global energy sector. Changing technological solutions constitute in this regard an important issue. Some of the Western European economies have recently departed from PWR (pressurised water reactor) devices, some of them have focused on researching other types of reactors (such as ITER – International Thermonuclear Experimental Reactor) designed for nuclear energy of new quality. It can be expected that these efforts of many countries will bear fruit within 10-15 years. PWR reactors on the other hand are a good, proven and failure-free technology that is constantly being modernised and adapted to the increasingly demanding safety conditions.

In Poland, the decision to invest in this type of energy source must be considered on many levels. This decision is of political, substantive, economic and social character.

First of all, it is difficult nowadays to imagine any social or political acceptance for a capital investor or a technology supplier from China or Russia, that is countries specialising in PWR technologies. Presently, everything indicates that it will be the United States to invest in the Polish nuclear energy programme. The only unknown variables are time and cost. It is worth mentioning that there are numerous examples of agreed upon budgets being exceeded by several dozen percent, as well as up to several years of construction delays. This does not mean, however, that these instances necessarily have to repeat themselves in the case of Polish investments.

Investing in nuclear energy in Poland is a political decision, closely related to the broadly understood national security, including that of military nature. We would be joining the group of countries with extended nuclear capabilities. Such an investment must be adequately protected.

The programme presented by the Ministry of Climate focuses to a larger extent on substantive and economic aspects, merely mentioning the political dominion of decision. The Union of Entrepreneurs and Employers, however, views its political aspect as the chief motive when making such a decision. One may notice this, among other things, in in the financing model of this power plant as proposed by the Ministry of Climate, which seems to be adapted to the possibilities and conditions of the American partner.

If the security of our country increases significantly as a result of the construction of a nuclear power plant, such a decision ought to be made.

Of course, the economic conditions of such a decision are also highly important, henceforth the need for tough negotiations with the future co-investor.

It seems that following the arguments presented above, the direction of investment becomes obvious, especially since it should not be difficult to explain the reasons for such a decision to both the public and European stakeholders. In our view, a positive decision to invest in nuclear energy should be taken at the highest level and be preceded by an explanation stage dedicated to the public. Additionally, in accordance with the requirements of the Treaty establishing the European Atomic Energy Community, this decision will be subject to approval by the European Commission and this issue should be taken into account in the to be undertaken.

A negative investment decision must also be based on solid foundations, the more so as the programme has already cost taxpayers more than PLN 500 million.

It seems that there is neither basis nor even the possibility of completely decommissioning coal-fired power plants in Poland by 2045. By reducing the share of coal to 50% by 2030 and to 30% in the energy mix by 2035, we will probably obtain the approval of the European Commission for a form of transformation that will assume the complete liquidation of coal-based energy by 2050. The development of renewable and gas energy over the years will fully meet the country’s energy needs in terms of electricity and heat (based on gas and electricity). At present, the country’s total highest demand amounts to approximately 28,000 megawatts. However, a political problem may arise in the form of the question as to how should we satisfy the fuel needs of a wide park of gas generating units – in Polish economic conditions there is a risk of the need to establish trade relations in this respect with the Russian side, which may raise concerns about the influence of Gazprom on Poland’s energy security.

Considering the level of the country’s energy security, the development of distributed energy seems to be optimal. We will leave the guarantee of the system operation to modern supercritical coal-fired units, gradually replaced by gas units. At the same time, over the period of 20 years, we will ensure a peaceful and harmonious transformation process for the mining industry, avoiding unnecessary social tensions.

To sum up, we are not opposed to the construction of a Polish nuclear power plant, but the criteria for such an investment must be broader than those presented in the proposed document. The programme should be properly presented to the public. When choosing a technology, the target power of the installation should be taken into account. At the same time, in the future, further development of the programme based on other nuclear installations should be considered. Nuclear energy should also be included in Poland’s new energy mix.

It is necessary to precisely (using a timeline) plan for subsidising nuclear energy together with a system of cooperation between nuclear energy and other sources, with particular emphasis on distributed energy.

The political sensitivity of this subject requires extremely prudent diplomatic actions, covering not only diplomacy itself, but also business and science, allowing for certain compromises in the name of generally understood superior values. This will apply in particular to our European partners.

Also, the decision to abandon the Polish nuclear energy programme should be very precisely motivated and based on hard data from the same areas as in the case of a positive decision.

As part of this position of the Union of Entrepreneurs and Employers, we enclose a set of comments to individual provisions of the drafted document.

26.08.2020 Position of the Union of Entrepreneurs and Employers on the Polish nuclear power programme

 

Fot. Frédéric Paulussen / Unsplash.com

Warsaw, 18th August 2020

 

New taxes proposed by the European Union threaten Poland’s development

 

The topic of the funds negotiated by Poland has dominated the discussion revolving the conclusions of the last summit of the European Council. Meanwhile, little attention has been paid to the introduction of European taxes. In a new report, the Union of Entrepreneurs and Employers presents a number of threats resulting from the proposed European levies. Plastic, digital and carbon taxes as well as the extension of the ETS do not comply with the requirements of the European Parliament. They also lead to a deeper fiscal harmonisation, and thus the unification of business conditions in the EU. From the Polish perspective, the new taxes pose a risk of a disproportionately heavy burden on the economy and greater dependence on financing from the EU budget.

There is no doubt that the COVID-19 pandemic and the resulting challenges for the EU require extraordinary measures. Therefore, the proposal to create the Next Generation EU fund as an addition to the traditional EU budget should be treated as an opportunity to rebuild the member states’ economies. However, the taxes created to finance the fund will have effects that go well beyond the coronavirus crisis.

“The conclusions adopted at the summit in the field of taxes are very dangerous for Poland and may cause us to be permanently poor compared to Western Europe. Poland has few tools to compete with the West. The legal and institutional order is one of them. Harmonisation of the law deprives us of this advantage,” says Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers.

In a new study, the Union of Entrepreneurs and Employers analyses proposed European taxes based on criteria established by the European Parliament. As a result, it identifies a number of threats and a trend of deepening fiscal integration – extremely dangerous from the Polish point of view.

“At the moment it remains possible for Parliament to veto this agreement. It seems that it is in the interest of Poland and Polish business to find an agreement between the Council and the Parliament and to refine in the best way possible the mechanisms that would limit the negative impact of new taxes on the development opportunities for the Polish economy, while at the same time taking steps to rebuild the European economies after the pandemic,” emphasises Kamila Sotomska, Analyst at the Department of Law and Legislation of the UEE.

In a report by said Union, it is indicated that plastic, digital and carbon taxes and the extension of the ETS system may not meet the conditions set by the European Parliament, including:

1) economy: the taxes proposed by the Council do not comply with the principle of universality of taxation contained in this criterion.

“The Union of Entrepreneurs and Employers consistently opposes the introduction of any sectoral levies. One of the key features of the tax system should be universality, whereas imposing additional burdens on arbitrarily selected sectors of the economy is unacceptable,” says Cezary Kaźmierczak.

“We support activities aimed at transformation towards a circular economy, but it seems that tax instruments are not appropriate for solving this type of problems,” adds Kamila Sotomska.

2) justice: in line with this notion, situations where a greater burden is placed on more disadvantaged member states should be avoided. Although the plastic tax provides a discount for member states whose recycling systems are at an early stage of development, the UEE believes that the levy will disproportionately burden poorer EU countries. Poland will become the fifth largest tax payer, paying EUR 429 million to the EU budget. The effects of this new regulation may be particularly severe for local governments or operators of waste incineration plants and landfills. By comparison, the cost of managing a tonne of waste in thermal treatment installations (which currently amounts to PLN 300-700) will have to be increased by PLN 3,500 in tax.

As the UEE points out in their report: “the introduction of a digital tax will have a negative impact on the condition of the Polish economy, and thus may not fulfill the premise of justice between member states. The dynamic development of the digital industry shows its growing share in the creation of Polish GDP – in 2014 it amounted to 3%, in 2016 approximately 6.2%, and in 2025 it may amount to 12%. Moreover, the share of established digital companies increased significantly: from 3% in 2015 up to 20% in 2019, and Poland remains in fourth place among the EU members in terms of the number of IT graduates. So there is no doubt that it is in our interest to create and maintain favourable conditions for the development of the digital industry ”.

3) red tape and administration: this criterion means that the costs of introducing a tax must be small in comparison with the resulting profits. However, the levies proposed by the Council will not meet this condition, as they have negative practical, legal, and political consequences.

The amount of carbon tax is to be determined based on the amount of carbon dioxide emitted in the process of production of a given good. Determining the carbon content poses a number of practical and legal problems, e.g. it would force companies to disclose supply chain details, i.e. trade secrets.

We will also run into serious problems in terms of digital taxation. According to the OECD, it would be almost impossible to divide the economy into a digital and a traditional economy, and would it require putting arbitrary boundaries into place. Given the income ceiling set at EUR 750 million, the digital tax will be a de facto tax on US companies. As America is opposed to any country’s proposition to regulate the digital sector, such unilateral action will lead to political tensions and the weakening of the EU’s position in relation to its partners in other parts of the world.

“The Union of Entrepreneurs and Employers recommends actions that will mitigate the negative effects of taxes proposed. For Poland, the ability to compete with other countries in terms of institutional environment for entrepreneurship should be of key importance. At the moment, we are not taking enough advantage of our situation, but the shift towards ‘fiscal federalism’ will practically deprive us of it,” concludes Cezary Kaźmierczak.

 

20.08.2020 New taxes proposed by the European Union threaten Poland’s development. Memorandum of the Union of Entrepreneurs and Employers on the conclusions of the summit of the European Council

Warsaw, 24^th August 2020

 

Position of the Union of Entrepreneurs and Employers
on the draft act introducing the so-called Estonian CIT

 

On 12^th August 2020, the Government Legislation Centre published a draft law introducing the so-called Estonian CIT. According to the assumptions therein, beginning in 2021, certain capital companies that will allocate their earned profit for investments in their enterprises will not pay income tax. A similar system of corporate income taxation has been in place in Estonia for 20 years, hence its commonly adopted name.

The Union of Entrepreneurs and Employers believes that the introduction of the Estonian CIT generally promotes investment and the development of entrepreneurship. Moreover, this solution significantly reduces the reporting obligations of companies covered by it, which may lead to even eleven-fold reduction of time necessary to fulfil all obligations related to taxes. With this in mind, we conclude that the Estonian CIT is a step in the right direction.

It should be emphasised that, in accordance with the current version of the draft, the material scope of the act is narrowed down to entities that meet all of the following conditions:

• total annual revenues do not exceed PLN 50 million,
• more than 50% of revenues come from real business activities,
• average annual employment is at least 3 people who are not partners,
• they operate in the form of a limited liability company or joint stock company, the shareholders of which are only natural persons,
• they do not hold any shares in the capital of another company, participation titles in an investment fund or in a collective investment institution.

As we can read in the explanatory memorandum, the target group of the new regulations are companies from the SME sector, which have a high development potential and thus their growth may constitute an impulse for the development of the entire economy. The Ministry of Finance justifies the selection of this group of entrepreneurs referring to problems with access to financing for these entities. It seems that such a definition of the target group of recipients of the new solution is absolutely correct. Large companies already have a catalogue of tools enabling the reduction of CIT in connection with the investments made (e.g. IP-box). Therefore, it seems justified to designate a separate path to stimulate investment for representatives of small and medium-sized businesses running real economic activity (criterion of the source of income and average annual employment).

As emphasised by the representatives of the Ministry of Finance, by way of public consultations, it is possible to “loosen” certain restrictions limiting taxpayers’ access to Estonian CIT. Such declarations of readiness to continue working on the regulation should be appreciated. We believe that the group of entities covered by the new solution should be as wide as possible, which is why we count on the project’s evolution towards an even greater openness to business. One could consider, among other things, modification of the employment criterion so that all persons reported by the employer to social insurance were taken into account (a similar formula was used for the distribution of the Polish Development Fund’s “financial shield”), and not only those employed under an employment contract. In the long-term, it would also be possible to consider a solution enabling companies covered by Estonian CIT to develop through the acquisition of other companies – the draft in the current wording prevents Estonian CIT taxpayers from holding shares or stocks in the capital of another company.

Some doubts may arise when it comes to excluding limited joint-stock partnerships from the subjective scope of the draft act. In the justification, the Ministry of Finance motivates limiting the regulation only to limited liability companies and joint-stock companies with the same method of taxation of these entities in the classic CIT system and the need to develop consistent system assumptions as to the method of taxation and the amount of the tax burden in the lump sum system. The aforementioned argumentation seems convincing, but it would be worth reconsidering the possibility of extending the subjective scope of the new regulation also to limited joint-stock partnerships.

If the above conditions are met, the “Estonian” taxpayer will not pay income tax until the dividend is paid, i.e. until the profit remains with the company or is allocated to investments. On the practical side, taxpayers will be able to choose from two available options. Under the first one, they will stop paying monthly or quarterly advances and making annual settlements. As part of the second, they will pay the equivalent of CIT advances to a special account. Then these write-offs will be recognised as tax deductible costs. Then, as the Ministry of Finance assures, the same economic effect will be achieved as with maintaining classic CIT settlements.

Estonian CIT rates will be higher than the classic ones, yet the Ministry of Finance ensures that the effective tax rate for entrepreneurs who settle their taxes in the new system will be lower thanks to the new mechanism. As before, when the dividend is paid, entrepreneurs will pay CIT and PIT on the dividend. This is a significant difference to the Estonian model system, where there is no double taxation with respect to income generated by the company and then paid as dividends.

It should be remembered that in the classic CIT system, the company has to pay 19% or 9% in case of a small taxpayer. Moreover, the dividend is covered by a 19% PIT. Ultimately, the total tax rate is 26.29% for small and 34.39% for larger entities. Interestingly, in the Estonian system, the nominal CIT rate for larger taxpayers will increase to 25% for larger and 15% for smaller entities. The Estonian system also provides for a five percentage point reduction in the rate for entrepreneurs who meet additional investment requirements. Despite the higher rates, the Ministry of Finance assures that the new system includes a mechanism of deducting the amount of CIT from PIT from the dividend.

As a result, the effective tax rates after the changes are to be as follows:

• 25% for smaller entities or 20% in case an additional investment criterion is fulfilled instead of 26.29% in the classic system,
• 30% for normal taxpayers or 25% in case an additional investment criterion is fulfilled instead of the current 34.39%.

The difference in effective tax rates under the Estonian system indicates that the use of this settlement formula will ultimately result in actually lower taxation of the income generated by a company than in the “traditional” model. Therefore, the proposed system will be attractive to taxpayers both due to the postponement of the moment the tax obligation arises and due to the overall lower effective tax rate.

As we have mentioned earlier, a necessary condition for maintaining the preferential method of taxation is incurring certain outlays on investments. Taxation with Estonian CIT will cover the period of 4 years and will be automatically extended for the following years. If the required expenses are not incurred for investments, the entrepreneur will lose the right to “Estonian” taxation and will only be able to apply for it again after 3 years. In this regard, the possibility of modifying the planned regulation should be considered in such a way that a taxpayer who has lost the right to settle accounts in the amended CIT system could apply for it again at the beginning of the next tax year.

To sum up, we believe that the Estonian CIT is a necessary idea that might significantly support investments and development of entrepreneurship. The regulation in question is therefore a step in the right direction and ought to be evaluated positively.

24.08.2020 Position of the Union of Entrepreneurs and Employers on the draft act introducing the so-called Estonian CIT

 

Fot. loufre / pixabay.com

Warsaw, 10^th August 2020

 

Opinion of the Union of Entrepreneurs and Employers regarding the presented proposals for regulatory changes in the field of development of renewable sources in Poland

 

We would like to begin with emphasis on the immediate need to adapt legislation in this area both to the European climate neutrality policy and to the situation the energy sector related to the pandemic.

We consider all actions aimed at increasing the supply of green energy to be appropriate and necessary – not only in connection with EU obligations, but also due to the needs of Polish industry.

In this regard, we assess the proposed changes very positively. The document presented by the Ministry of Climate concerning the amendment of the ‘act on renewable energy sources and certain other acts’ approaches the issues related to the development of this sector of energy in a comprehensive and coherent manner, changing the provisions in the entire scope related to the investment and operational process of renewable energy sources in the future. The authors of the draft noticed the need for changes not only in the Renewable Sources Act, but also in the Energy Law and the Spatial Development Act. Only this approach creates proper foundations for the development of distributed energy.

The proposed changes may have a decisive impact on the development of widely understood distributed energy, as their scope covers small and medium-sized enterprises, i.e. the most dynamic sector of the Polish economy. The act increases the power parity for entrepreneurs with regard to their own renewable installations.

A rapid increase in investment opportunities in the field of renewable installations by clearly defining the concept of “small RES installation” gives the SME sector an opportunity to boost competitiveness as well as a certain energy independence, so needed in rural areas in particular.

The selection of the size of such an installation in the range of 50–500 kW should also be considered quite apt, as this is the range of averaged power consumption in the sector of small and medium-sized enterprises, as well as medium-sized farms. In the project, we did not find a description of a small installation on a farm, henceforth we ask: do the figures shown above also apply to farms?

The proposed changes are aimed at creating a predictable framework for the development of the renewable sector, extending by law the support systems for individual technologies by 5 years. At the same time, the act emphasises the function of the auction system as a guarantor for financing institutions, recognising this support system as the cheapest and the most effective in Polish economic conditions.

The act also mitigates the problems of investors who, due to the pandemic, will exceed the maximum time limit for producing or selling electricity for the first time. It is also a very good decision, all the more so, as it minimises the bureaucratic process, without too much involvement of the Energy Regulatory Office. The form of declarations when submitting applications for extending the deadline is very accurate in this case.

We fully support the form of reducing bureaucracy in the entire registration process of energy producers from RES proposed in the Act, and thus reducing administrative burdens for the Energy Regulatory Office.

Amendments to the Spatial Planning Act, enabling in practice the rapid development of photovoltaics, constitute another much anticipated initiative, as a result of which, within a few years, there may be a significant increase in the supply of green energy and the stabilisation of the ends of transmission lines.

We are convinced that the entry into force of the act in the proposed form will stimulate the development of renewable energy sources, which must in turn stabilise energy prices for end users. The proposed amendments certainly meet the social demand, securing important solutions for energy producers from RES and for the industry related to investments in RES in its entirety.

However, some controversy is raised by the proposed form of regulation regarding the definition of installed capacity. Although a certain compromise has been reached here with circles in the RES community, which can be considered rational and promising for the development of RES in Poland, we suggest that the definition be refined in the future in such a way that it allows for some flexibility in extracting power from RES installations, especially when modernising such installations.

When assessing positively the proposed legislative changes regarding renewable energy sources, we would like to remind all parties involved that there is an urgent need for further work in this direction.

Unblocking investment opportunities in onshore wind energy by amending the provisions of the so-called “distance act” is the most important legislative task for the legislator today. We would like to remind them once again that onshore wind energy nowadays is the cheapest source of electricity, the development of which has been impeded by the provisions of the act.

Rapid adoption of all legislative acts enabling investments in offshore wind energy is yet another urgent need, because such investments will stabilise the country’s entire energy system.

We also like to remind everyone interested of the need for rapid legislative work in the area of grids and connections allowing for the development of distributed energy.

 

11.08.2020 Opinion of the Union of Entrepreneurs and Employers regarding the presented proposals for regulatory changes in the field of development of renewable sources in Poland

 

Fot. Appolinary Kalashnikova / Unsplash.com

Warsaw, 18^th August 2020

 

Appeal of the Union of Entrepreneurs and Employers
regarding the pay rises of persons holding public office

 

The Union of Entrepreneurs and Employers believes that increasing the salaries of persons performing public functions serves the public interest. The imbalance between the remuneration received and the scale of responsibility is particularly visible in the case of deputy ministers. With this in mind, we appeal to the members of the Sejm of the Republic of Poland (Parliament’s lower house) not to succumb to populist pressure and to reject the veto of the Senate (Parliament’s upper house) regarding the draft act increasing the salaries of people holding public office, and then to immediately amend that act, correcting some of the errors within. Above all else, we draw attention to the need to clearly link the salaries of politicians with the average salary in the national economy, to withdraw from the increase in subsidies for political parties, and to adopt an even greater salary increase for the most important people in the country, i.e. the President and the Prime Minister.

There is no doubt that all of us should care about high-quality public services. One of the basic instruments to achieve the goals of public or private organisations is to have appropriate, competent staff with knowledge, skills, and experience.

Independent market data and expert opinions indicate two phenomena. First, there is a pay gap in the salaries of senior public officials relative to senior management and experts in the private sector. Secondly, the scale of responsibility and the significance of decisions made, the complexity of tasks, the scope of management, the necessary experience, knowledge or the need to ensure financial independence, situate the positions of high officials in the public sector above the level of top managers and experts in the private sector. To sum up, despite the higher importance of positions, people employed in public administration earn several times less than managers in large companies.

The above phenomenon leads to a negative selection of staff in the broadly understood public sector. The low level of remuneration for public sector employees makes it difficult in the long term to keep people with adequate or above-expectations competencies in this sector. Taking the aforementioned into account, it is necessary to ensure such a level of their remuneration that will keep these people working in public administration.

Moreover, the current situation is actually disrupting the natural separation of powers due to the increasingly frequent phenomenon of combining the functions of members of the Council of Ministers and secretaries of state with the function of a member of the parliament. This way, the salary combined from the function performed is supplemented by the remuneration obtained as MP. There is no doubt that this is not a desirable condition – increasing salaries for ministers and deputy ministers would allow limiting (if not completely eliminating) this practice.

At the same time, elective officials should also have a sustained level of remuneration that allows them to maintain their current and future financial independence from decisions made in the exercise of power. We would like to emphasise that the amount earmarked for pay rises for persons performing public functions in the state would be marginal from the point of view of the state budget. Concurrently, it would be an investment in the quality of the administration.

However, the introduced salary increases cannot be the only tool and effect of the amendment. The reform of the wage policy in the public sector should be a reform of the entire remuneration system.

As part of the necessary changes, we postulate to:

1. restore the level of an MP’s salary to the level prior to its 2018 reduction,
2. increase the remuneration of persons indicated in the draft act amending certain acts on remuneration of persons holding public office and amending the act on political parties (Druk/Print 551) to a level directly dependent on the national average,
3. introduce a system of supervision over money spent within public budgets and create instruments conducive to the efficiency of their spending,
4. limit the number of officials in both senior and junior positions.

In the context of the last postulate, low efficiency of activities is noticeable in relation to the scale of employment in public administration. It is a common phenomenon in every democratic system. So is the growth of bureaucracy, which was already noticed at the dawn of modern systems of public administration. Considering the above, the Union of Entrepreneurs and Employers recommends a significant reduction in the number of jobs in the Polish public sector. The first review should be performed after the COVID-19 crisis, and the consequent ones be carried out periodically, e.g. every 4 years. At the same time, the Union is of the opinion that along with the decrease in the level of employment, the salary budget in the public sector should be maintained, so that within the available funds, it is possible to grant an increase in the level of salaries to rank-and-file officials kept in the sector.

Simultaneously, the Union is critical of plans to increase the level of subsidies for political parties which was included in the draft act amending certain acts on remuneration of persons holding public office and amending the act on political parties (Druk/Print 551). Apart from general doubts as to the legitimacy of financing political parties from the budget, the resources at their disposal at the moment seem to be completely sufficient.

We would like to note that there is an argument among the critics of the plans to raise the salaries of persons holding public functions in terms of the wrong timing of the introduction of the change (the COVID-19 crisis). We wish to stress that there never is and will never be a good time to introduce changes of the proposed nature. When a few years ago, the government awarded prizes to high officials during an economic boom, populist slogans about limiting wages in the public sector were as omnipresent as they are today.

We call for a long-term perspective of decision-makers’ thinking about the quality of public administration and to not succumb to populist tendencies in this area.

 

18.08.2020 Appeal of the Union of Entrepreneurs and Employers regarding the pay rises of persons holding public office

 

Fot. nattanan23/pixabay.com

Warsaw, 13^th August 2020

 

The Union of Entrepreneurs and Employers consistently criticises
the idea and the implementation procedures of the sugar tax

 

The Union of Entrepreneurs and Employers consistently opposes the introduction of the sugar tax in Poland. At the same time, the Union expresses its objection to how the amendment to the non-enforced act on the promotion of healthy consumer choices is being handled.

The Union would like to point out that any sectoral levies, including the sugar tax, are unacceptable, as they violate the principle of universality of taxation. It is impossible to accept an arbitrary imposition of additional tax burdens on a chosen sector of the economy, especially considering the specific times we have found ourselves in. The economic shock caused by the coronavirus pandemic has posed a number of challenges for entrepreneurs who operate in conditions of reduced demand and extreme uncertainty. At the same time, the beverage industry, at which the sugar tax is mainly aimed, recorded very serious losses resulting from a drop in turnover of several dozen percent. Therefore, increasing levies on this industry is all the more unjustified and incomprehensible.

As for the impact of the sugar tax, it is impossible in an analysis not to refer to the procedure according to which amendments to the act containing it are processed. The works on the legal act under which the sugar tax will have been enforced have not yet been completed. The draft act has not yet been passed nor signed by the president. There are, however, amendments to this law that is not yet legally binding. Entries postposing the date of entry into force of the sugar tax from 1^st July 2020 to 1^st January 2021 have been hidden among the solutions contained in the act amending certain acts to ensure the functioning of the healthcare system in connection with the COVID-19 epidemic and afterwards. The possibility of amending a non-enforced act certainly had not been envisioned in the draft act procedure provided for in Art. 119 of the Constitution of the Republic of Poland. Unfortunately, the legal flaws of this amendment do not end there.

According to the information provided on the official website of the Polish Parliament, the draft act aims to introduce further instruments in the field of healthcare that will allow for an effective fight against COVID-19 – therefore, the sugar tax is completely unrelated to its objective. There is no doubt that this way of proceeding with amendments is contrary to the rules of legislation. These activities also lead to a situation in which entrepreneurs are deprived of any certainty as to the regulatory environment of their operations.

Bearing in mind all the above issues, the Union of Entrepreneurs and Employers maintains its position, according to which the sugar tax should not become part of the Polish legal system. This sectoral tax will primarily hit the sector of the economy that has suffered hard from the crisis caused by the pandemic. Such behaviour on the part of legislators is therefore devoid of any rational premises. We also believe that the introduction of the sugar tax will be burdened with a very serious legal flaw, and that it undermines the entrepreneurs’ right to legal certainty.

 

13.08.2020 The Union of Entrepreneurs and Employers consistently criticises the idea and the implementation procedures of the sugar tax