Some malicious voices say that this is already an election program, just in case early elections have to be called. The new government program presented last weekend at the national convention of the Law and Justice party (PiS) was, however, also signed by its allies in the United Right coalition. While Poles had been waiting for a “New Order”(Nowy Ład) for months, it was finally a “Polish Order”(Polski Ład) that was presented to them. It is in fact a major program of reforms that the Morawiecki government promises to implement at full speed.
Prime Minister Mateusz Morawiecki began a tour of Poland this week to present his government’s new program all over the country. The program’s objective is to “restore the order that was overturned by the epidemic,” he says. However, he believes that it is, in reality, a “new social contract” that the United Right coalition is proposing to Poles. With this program, the Prime Minister and PiS’ leaders are asserting their commitment to favor low-income families:
“There is a very large group of our citizens who are struggling to make ends meet and for whom it is difficult to save any money. The ‘Polish Order’ program is just for them,” said Mateusz Morawiecki.
“Several bills are already ready,” he confirmed. In all, there are about 100 bills that will enable the implementation of all of the major reforms announced.
The tax reforms are to come into effect as early as next January. On the side of tax cuts, the first tax threshold will be raised to 30,000 zlotys (approx. €6,600), below which Poles will no longer pay income tax. The threshold above which income is taxed at a rate of 32% instead of 17% will be raised from just over 85,000 zlotys of annual income to 120,000 zlotys. On the other hand, compulsory health insurance will no longer be deductible from the tax base.
According to the newspaper Rzeczpospolita, raising the tax thresholds will cost the budget around 60 billion zlotys, while abolishing the possibility of deducting health insurance contributions will bring in around 35–40 billion zlotys. In addition, the health insurance contributions that self-employed people have to pay will be increased to become proportional to their declared income (as for employees), so that a majority of self-employed people will actually see their taxes increase.
More generally, the tax reform announced by PiS should benefit those earning up to about 7,000 zlotys (about €1,600) per month but harm those earning more, who are fewer in number.
The “New Order” promised by PiS also plans to abolish the use of civil law contracts and self-employment for employment relations, which serves both to circumvent labor laws and to reduce social security contributions.
From the point of view of fair competition, European workers can only welcome this,
especially since after coming to power in 2015 PiS had already introduced a minimum hourly wage also applicable to those on civil law contracts, and the minimum hourly wage has been systematically raised year after year since then. In 2021, it is 18.30 zlotys/hour (€4.05) “gross”, in the Polish sense, that is, before deduction of income tax at source but after deduction of social security contributions.
In terms of social action, which is dear to PiS, the “Polish Order” program presented this weekend includes plans to increase health spending to 7% of GDP. PiS has given itself until 2027 to achieve this, but the threshold of 6% of GDP should be reached as early as 2023, the year of the next parliamentary elections if the United Right coalition holds out. This money will certainly not be excessive given the state of the public health system in Poland, which resembles that of its neighbors in the former Eastern Bloc.
In 2021, budgeted expenditure on the health system is 5.3% of GDP. In 2015, the last year of the coalition governments of the PO liberals and the PSL agrarian party, it was 4.44% of GDP.
In 2019, the last year before the Covid-19 pandemic, it was 4.86%.
The “Polish Order” program further plans to strengthen the pro-family, pro-birth policies of PiS, with, in addition to the family allowances already introduced by the Szydło government in 2016 (the first family allowances in Poland since the fall of communism),
a total subsidy of 12,000 zlotys (approx. €2,700) for each child from the second onwards, to be paid in 12 or 24 installments between the 12th and the 36th month after its birth.
In addition, there will be a program of state guarantees to enable the less wealthy to obtain bank loans for the purchase of housing, and also a program for the construction of low-cost apartments. In addition to taxation and social policies, the program also covers investments in digitization, education, infrastructure, agriculture, the environment, and pensions.
In all, it involves more than 650 billion zlotys (€145 billion) of spending between next year and 2030, which will represent between 3% and 4% of GDP.
It includes some ideas borrowed from opposition parties, some of which have already announced that they might support them because they are their proposals. This is yet another clever way for PiS to weaken the “total” opposition under the PO’s leadership that it has had to face since fall 2015.