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Is it time to change the capital gains tax? Here’s what Poles think

informacja sygnalna 3 www

Date: 8 May 2023

As the latest research shows, there is no enthusiasm among Poles for making changes to the so-called ‘Belka tax’. This was clearly shown in the analyses carried out by the Institute of Finance.

Taxation of income from monetary capitals was introduced by the Act of 21 November 2001. Since then, the so-called ‘Belka tax’ has been one of the important sources of income for the state budget. Between 2005 and 2021, the average annual budget revenue from this tax remained at the level of PLN 3.4 billion. As of 2016, it accounted for just under 1% of total government income.

Recently, voices have been raised in the public discourse, including in the media, pointing to potential changes in the taxation of revenue from cash gains. A proposal to increase the tax rate from the current 19% to 20%, together with the introduction of a tax-free amount (up to PLN 10 000 of income), has appeared in various analyses and news reports. However, in 2023, the Income Tax Department of the Ministry of Finance indicated that potential tax changes are only at the stage of analysis and working consultation, hence, any ideas appearing in the media may be considered nothing but mere speculation.

“The tax on capital gains has raised emotions among Poles for years. Observing the development of the public discourse on this topic, we, as the Institute of Finance, have decided to investigate citizens’ sentiments towards purely hypothetical adjustments to the ‘Belka tax’. We asked if the public would like any changes to be introduced. In particular, we looked at the concept of a one-percentage-point tax increase with the introduction of a tax progression, as recently advocated in the media”, explains Łukasz Chrobak, Director of the Institute of Finance.

What do Poles think of a theoretical solution involving a tax increase and the introduction of a tax-free sum? Surveys show that the public is not enthusiastic about the idea. Only 5% of respondents described the aforementioned solution as definitely positive. A further 9% assessed the idea rather positively. Nineteen per cent of respondents reacted rather negatively to the idea of raising the tax to 20%, and 23% reacted strongly negatively.

Therefore, as many as 43% of respondents were against this hypothetical solution. The Institute of Finance also addressed the issue of Poles’ income and the correlation of earnings with their views on tax changes.

Those earning between PLN 3,000 and PLN 5,000 gross per month were the most positive about the proposed solution. However, this solution would mostly encourage saving or investment by those Poles who have individual gross monthly income between PLN 7,000 and PLN 10,000 – 31% of responses. Therefore, it may be assumed that it is the latter group that is already in a position to save money and their income from savings falls within the considered tax-free threshold, making this solution beneficial for their household budgets, comments Katarzyna Obłąkowska, PhD, Head of the Behavioural Analysis and Social Research Team at the Institute of Finance, and co-author of the study.

The authors of the survey also note that only 20% of the respondents said that changes in tax on capital gains would encourage them to invest more. The greatest enthusiasm for a potential increase in investment was expressed by those with income between PLN 7-10,000 gross (31% of the respondents).

It may be assumed that, based on their income, the indicated group has the capacity to save. Furthermore, their potential income would fall within the tax-free threshold if the potential solution were implemented, adds Katarzyna Obłąkowska, PhD.

The survey by the Institute of Finance was conducted using CATI and CAPI on a nationwide representative sample of Poles aged 15+.

Link to background information: background information. Publication in Polish

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