Will VAT increase to 25%? fresh controversial government ideas

In Poland, opportunities are increasingly spoken of increasing the VAT rate au 25%. specified ideas have emerged in the context of possible taxation reforms and the introduction of fresh sources of gross for the state budget. This proposal creates quite a few controversy and concerns among entrepreneurs and consumers. Is it truly VAT will increase? What are the consequences?

Current VAT situation in Poland

Currently, 3 basic VAT rates apply in Poland:

1. 23% – basic rate applicable to most goods and services.
2. 8% – reduced rate, including food, books or medical services.
3. 5% – the rate for basic food products, medicines and certain services.

Implementation of the proposal to rise the VAT rate to 25% would be a revolutionary step and would have far-reaching consequences in the Polish economy. This change is requested by any taxation experts, who point to the request to increase the state's income in the face of rising public debt.

Why have there been proposals to rise VAT?

The increase in VAT rates is considered in the context of various financial challenges faced by the Polish government. In particular, the request to financing social programmes, investment in infrastructure as well as the cost of financial assistance during economical crises.

Increases in VAT to 25% could increase budgetary revenue, but would besides entail a hazard of falling consumption and rising prices of goods and services, which could negatively affect savings of Poles.

What are the consequences of expanding VAT to 25%?

According to analyses, expanding VAT to 25% would have respective crucial consequences. First, it would be drastic load for consumers, due to the fact that almost all commodity and service they get would become more expensive. As a consequence prices would increase, which would exacerbate financial difficulties for those with lower incomes.

Response of entrepreneurs and citizens

The increase in VAT to 25% was widely criticised by entrepreneurs and Citizens. Many people are worried that operating costs They will increase and entrepreneurs will be forced to rise the prices of their products and services to cover additional taxation burdens. As a result, this can lead to a decline purchasing power of Polesand thus to slow the pace of economical development.

In turn economists comply with specified decisions, arguing that higher taxes may lead to economical disadvantages specified as decrease in investment, Increase in unemployment is capital escape.

Alternative solutions

Although expanding VAT to 25% is 1 of the solutions under consideration, experts besides propose another forms of tax changeswhich can bring affirmative results without so much burden on citizens and entrepreneurs. These include: taxation of the largest companies, introduction of progressive taxes and reform of the taxation systemwhich would include improving the efficiency of taxation collection.

What are the next steps of the government?

For now, proposals to increase VAT to 25% are at the discussion stage. The government, although not yet making any circumstantial decisions, ensures that it closely monitors the economical situation and adapts taxation policies to current needs.

A VAT of 25% is simply a controversial proposal which will surely trigger a broad public debate. On the 1 hand, this can contribute to the increase in budgetary revenue, on the another hand, it can negative impact on consumers and entrepreneurs. It is worth keeping track of further developments, as VAT decisions will have long-term consequences for the Polish economy and society.