- Government proposes 2-billion zloty levy with progressive rate
- Cabinet seeks to fund social spending after 2015 election wins
Poland plans to raise 2 billion zloty ($485 million) from a tax on retailers, which will seek to draw the most from foreign-owned businesses such as Jeronimo Martins SGPS SA, Tesco Plc and Schwarz Group.
The Finance Ministry has proposed a progressive scale, with a tax-free bracket for those with no more than 1.5 million zloty in monthly sales, a 0.7 percent rate for those between 1.5 million zloty and 300 million zloty and 1.3 percent on revenue exceeding 300 million zloty, according to an e-mailed statement on Monday. A 1.9 percent levy would apply on weekend and holiday revenue, according to the plan that’s yet to be adopted by the cabinet and also needs lawmakers’ approval.
Poland’s new government has faced criticism for its overhaul of the media law and the constitutional court, while the nation’s debt was downgraded for the first time ever by Standard & Poor’s, which warned that the cabinet’s policies imperil the country’s institutions. The retail tax plan follows a levy on banks, approved this month, which is set to bring in 4.4 billion zloty of budget revenue this year.
As with the bank tax, the retail levy follows similar measures in Hungary over the past six years. The government in Budapest was forced to rework its plan after the European Commission said the progressive tax scale would give smaller shops an unfair advantage.
“We hope that our scale will be flat enough that it shouldn’t be a problem” for the EC, Henryk Kowalczyk, the Prime Minister’s economic aide, said by phone on Jan. 21. “But the risk is always there.” The Ministry says it adopted “equal” taxation model for all retailers “in accordance with European law.”
Premier Beata Szydlo’s Law & Justice party swept to power last year through a landslide victory in presidential and parliamentary elections on pledges to stand up for ordinary Poles. The new tax plan aims to help local retailers, according to the finance ministry.
Portugal’s Jeronimo, Poland’s biggest retailer with 2015 sales of about 39 billion zloty, will “take the biggest hit,” Pekao Investment Banking SA’s analyst Malgorzata Kloka, said in a Monday note before details of the plan was known. The country’s top five retailers, all foreign investors, are set to generate about 100 billion zloty of revenues this year, according to Pekao.
Jeronimo Martins’ shares jumped 3.2 percent to 11.7 euro in Lisbon after the announcement as investors expected a “higher maximum rate of the new levy and a steeper progression,” Lukasz Wachelko, an analyst at Wood & Co. in Warsaw, said by phone. He expects the company to pay about 500 million zloty in tax per year.
The tax will also be levied on fuel sales at petrol stations, which according to some previous proposals were excluded. Spokespeople at PKN Orlen SA and Grupa Lotos SA, the country’s two biggest fuel refiners and retailers, didn’t have any immediate comment when reached by phone.
The sale of partly-refunded medicine, meals as well as natural gas, water, heat and electricity won’t be taxed, according to proposal. The new levy shouldn’t impact the retail prices thanks to “high level of competition” in the Polish market, Finance Minister Pawel Szalamacha was cited as saying in the e-mail.