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08/12/2016

Polish conservatives to copy Hungarian ‘special taxes’

Elections

Polish conservatives to copy Hungarian ‘special taxes’

Piotr Gli?ski [PiS]

The Polish opposition party Law and Justice (PiS) wants to introduce Hungarian-style special taxes on banks and supermarkets if it comes to power, a close adviser to the party leader was quoted as saying today (16 June).

Piotr Gli?ski said the party, which leads opinion polls before October’s parliamentary elections, would also aim to limit profits transferred abroad by foreign firms operating in Poland.

PiS, affiliated with the Conservative and Reformists Group of the Tories, was recently boosted by the victory of its candidate Andrzej Duda in the presidential elections held last month.

>> Read: Conservative candidate wins Polish presidential election

The ruling pro-business party Civic Platform (PO), EPP affiliated, was further weakened by an eavesdropping scandal which led to the resignation of four high profile politicians.

>> Read: Sikorski resigns following eavesdropping revelations

“We uphold the proposal of sectoral taxes – that is, taxing financial institutions and retail networks,” Gli?ski said in an interview with the Polish newspaper Rzeczpospolita.

“We want to send a message to our foreign guests that we are happy to see their honestly-run businesses, but we have to introduce taxes which they are also paying in other countries,” Gli?ski said.

About two-thirds of Poland’s banks and most of its large retail networks are foreign-owned. All companies pay a flat income tax rate of 19%. Banks also a levy for a banking guarantee fund.

The two latest opinion polls gave an alliance led by PiS about 30% support. PO got only 19%.

Asked if imposing new taxes would not make foreign investors leave Poland, Gli?ski said: “This has not happened anywhere in the world. Please look at Hungary, which has introduced such measures recently.

“Competition means that these institutions agree to a lower margin … In Poland this margin is the highest in Europe, so there is plenty of leeway,” said Gli?ski who chairs the committee drawing up the party’s policy programme.

Polish banks overall had a 10.2% return-on-equity profitability ratio in the first half of last year, one of the highest in Europe, European Central Bank data show. The ratio for the entire European Union was 4.6%.

In Hungary, the ratio was minus 32.2%. Hungary has slapped special taxes on banks and forced them to convert loans denominated in Swiss franc loans into the local currency.

Spain’s Banco Santander, Italy’s Unicredit and Germany’s Commerzbank are among banking groups that own Polish subsidiaries.

Background

Hungarian Prime Minister Viktor Orbán, leader of the Fidesz party (EPP-affiliated), has clashed repeatedly with the European Union and foreign investors over his unorthodox policies.

>> Read: Foreign supermarket chains threatened by Hungary

>> Read: Hungary’s banks reeling after government tax

>> Read: EU firms nervous about new Hungarian laws, taxes

In the past four years, Orbán's policies have included a nationalisation of private pension funds, "crisis taxes" on big business, and a relief scheme for mortgage holders for which the banks, mostly foreign-owned, had to pay.

His policies helped Hungary emerge from recession, but some economists say Orbán may have scared off the kind of investment Hungary needs for long-term growth.