Reforming Tax Expenditure Programs in Poland
Poland has recently begun reforming its tax program. In December 1999 it announced a gradual reduction in the corporate income tax rate, from 34 percent in 1999 to 22 percent in 2004. Value added and excise taxes are being harmonized with European Union directives, which means higher value added tax...
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| Format: | Policy Research Working Paper |
| Language: | en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://hdl.handle.net/10986/19969 |
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okr-10986-199692021-04-23T14:03:52Z Reforming Tax Expenditure Programs in Poland Cavalcanti, Carlos B. Li, Zhicheng accounting Bonds budget process charitable contributions corporate income tax corporate income taxes debt deductions developed countries direct payments dividends double taxation economic development economic efficiency Effective Tax Rates estate taxes excise tax excise taxes fishing forestry fuels government spending housing income groups income tax bracket inflation installments insurance insurance premiums municipal services opportunity costs paying taxes policy makers price subsidies provisions Revenue Loss savings structural unemployment tax tax administration tax base tax brackets tax exemption tax exemptions tax expenditure Tax expenditures tax law tax laws tax liabilities tax liability tax measures tax obligations tax rates tax reduction tax reductions tax reform tax returns tax revenue tax revenues tax savings taxable income taxation taxpayers unemployment value added tax Poland has recently begun reforming its tax program. In December 1999 it announced a gradual reduction in the corporate income tax rate, from 34 percent in 1999 to 22 percent in 2004. Value added and excise taxes are being harmonized with European Union directives, which means higher value added tax rates on unprocessed foodstuffs, municipal services, and construction material, and higher excise rates on tobacco and alcohol. The reform of personal income tax law has been delayed, because of concern about the fairness of a rate reduction for higher-income taxpayers and hesitation about the government's proposal to remove or scale down existing tax expenditure programs. Poland's personal income tax expenditure programs, introduced in 1992, have received growing attention as the cost of the programs has increased. Originally they were intended to compensate lower-income taxpayers for the withdrawal of price subsidies. But most of them are extremely regressive, benefiting higher-income taxpayers. Tax expenditures are reductions in tax liabilities that result from preferential provisions, such as deductions, exemptions, credits, deferrals, preferential tax rates, and exclusions from taxation. They are effective government spending channeled through the tax system, usually as substitutes for direct government spending to achieve fiscal and political objectives. The authors contend that strengthening the administration of Poland's tax expenditure programs is the first step toward making them effective and equitable, limiting their costs, and preventing the tax base from shrinking. They discuss options for increasing the scrutiny of the tax expenditure programs, defining their opportunity costs and effect on the tax system. Currently these programs enjoy a funding advantage over direct spending programs because they are not subject to systematic review. To limit the expansion of these programs and reduce their less desirable effects on the system, the authors suggest defining a benchmark tax structure, establishing sunset dates for the programs, forecasting their costs, and reviewing their economic effectiveness, efficiency, and equity by comparing them with direct expenditures and subsidies 2014-09-04T21:58:32Z 2014-09-04T21:58:32Z 2000-10 http://hdl.handle.net/10986/19969 en_US Policy Research Working Paper;No. 2465 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Europe and Central Asia Poland |
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Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
en_US |
| topic |
accounting Bonds budget process charitable contributions corporate income tax corporate income taxes debt deductions developed countries direct payments dividends double taxation economic development economic efficiency Effective Tax Rates estate taxes excise tax excise taxes fishing forestry fuels government spending housing income groups income tax bracket inflation installments insurance insurance premiums municipal services opportunity costs paying taxes policy makers price subsidies provisions Revenue Loss savings structural unemployment tax tax administration tax base tax brackets tax exemption tax exemptions tax expenditure Tax expenditures tax law tax laws tax liabilities tax liability tax measures tax obligations tax rates tax reduction tax reductions tax reform tax returns tax revenue tax revenues tax savings taxable income taxation taxpayers unemployment value added tax |
| spellingShingle |
accounting Bonds budget process charitable contributions corporate income tax corporate income taxes debt deductions developed countries direct payments dividends double taxation economic development economic efficiency Effective Tax Rates estate taxes excise tax excise taxes fishing forestry fuels government spending housing income groups income tax bracket inflation installments insurance insurance premiums municipal services opportunity costs paying taxes policy makers price subsidies provisions Revenue Loss savings structural unemployment tax tax administration tax base tax brackets tax exemption tax exemptions tax expenditure Tax expenditures tax law tax laws tax liabilities tax liability tax measures tax obligations tax rates tax reduction tax reductions tax reform tax returns tax revenue tax revenues tax savings taxable income taxation taxpayers unemployment value added tax Cavalcanti, Carlos B. Li, Zhicheng Reforming Tax Expenditure Programs in Poland |
| geographic_facet |
Europe and Central Asia Poland |
| relation |
Policy Research Working Paper;No. 2465 |
| description |
Poland has recently begun reforming its tax program. In December 1999 it announced a gradual reduction in the corporate income tax rate, from 34 percent in 1999 to 22 percent in 2004. Value added and excise taxes are being harmonized with European Union directives, which means higher value added tax rates on unprocessed foodstuffs, municipal services, and construction material, and higher excise rates on tobacco and alcohol. The reform of personal income tax law has been delayed, because of concern about the fairness of a rate reduction for higher-income taxpayers and hesitation about the government's proposal to remove or scale down existing tax expenditure programs. Poland's personal income tax expenditure programs, introduced in 1992, have received growing attention as the cost of the programs has increased. Originally they were intended to compensate lower-income taxpayers for the withdrawal of price subsidies. But most of them are extremely regressive, benefiting higher-income taxpayers. Tax expenditures are reductions in tax liabilities that result from preferential provisions, such as deductions, exemptions, credits, deferrals, preferential tax rates, and exclusions from taxation. They are effective government spending channeled through the tax system, usually as substitutes for direct government spending to achieve fiscal and political objectives. The authors contend that strengthening the administration of Poland's tax expenditure programs is the first step toward making them effective and equitable, limiting their costs, and preventing the tax base from shrinking. They discuss options for increasing the scrutiny of the tax expenditure programs, defining their opportunity costs and effect on the tax system. Currently these programs enjoy a funding advantage over direct spending programs because they are not subject to systematic review. To limit the expansion of these programs and reduce their less desirable effects on the system, the authors suggest defining a benchmark tax structure, establishing sunset dates for the programs, forecasting their costs, and reviewing their economic effectiveness, efficiency, and equity by comparing them with direct expenditures and subsidies |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Cavalcanti, Carlos B. Li, Zhicheng |
| author_facet |
Cavalcanti, Carlos B. Li, Zhicheng |
| author_sort |
Cavalcanti, Carlos B. |
| title |
Reforming Tax Expenditure Programs in Poland |
| title_short |
Reforming Tax Expenditure Programs in Poland |
| title_full |
Reforming Tax Expenditure Programs in Poland |
| title_fullStr |
Reforming Tax Expenditure Programs in Poland |
| title_full_unstemmed |
Reforming Tax Expenditure Programs in Poland |
| title_sort |
reforming tax expenditure programs in poland |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://hdl.handle.net/10986/19969 |
| _version_ |
1764444192861323264 |