Polish minister seeks to simplify tax code - Marketplace by Bloomberg - International Herald Tribune

Polish minister seeks to simplify tax code - Marketplace by Bloomberg - International Herald Tribune

Poland's three-month-old government plans to simplify the tax code and lower obligatory pension contributions to bolster economic growth, said the finance minister, Zyta Gilowska.

"Labor costs have to be lowered, and tax code changes should encourage companies that care about investments and employees," Gilowska said at a news conference here on Saturday.

The governing Law and Justice Party, which won elections in September on a pledge to lower taxes and cut the budget deficit, wants to push economic growth beyond the 4.3 percent projected for 2006. Prime Minister Kazimierz Marcinkiewicz reiterated last week that growth may be 5 percent.

The Law and Justice Party campaigned on promises to introduce a personal income tax of 18 percent and 32 percent, versus the current brackets of 19 percent, 30 percent and 40 percent. It aims to cut the corporate tax benlow the current 19 percent.

But at her news conference, Gilowska said such changes may not be possible in the coming years because of the budget shortfall.

Poland is obliged to trim its budget deficit to 3 percent of gross domestic product from 4.4 percent now to adopt the euro. The plan presented Saturday by the Finance Ministry might cost the budget 11 billion zlotys, or $3.5 billion, a year.

"It has been our great concern how we will cover it, but we will find a way to do it," Gilowska said.