Polish Premier Backs Finance Minister as Retail Tax Row Grows

Polish Prime Minister Beata Szydlo backed her finance minister after criticism from industry groups over her government’s plan to tax retailers sparked speculation his job could be on the line.

Poland’s retailers’ associations accused the ruling party last month of backsliding on a pre-election promise to introduce a tax they want to give mid-sized retailers a better chance to compete on the market by targeting bigger, mostly foreign-owned supermarket chains. Instead, they said the levy pushed by Finance Minister Pawel Szalamacha could affect smaller shops and increase the cost of staying open on weekends. That may benefit bigger players, which Jeronimo Martins, Tesco Plc and Carrefour SA.

“Pawel Szalamacha is one of the most important ministers in my government and is responsible for a very important field of public finances,” Szydlo said at a news conference with her Hungarian counterpart Viktor Orban in Budapest on Monday. “We’ve presented a concrete proposal and, as is usually the case, some people like it and others don’t. We’ll meet and continue our discussion.”

Poland’s Law & Justice government has alarmed some investors with plans to increase spending, in part by taxing large foreign-owned companies including banks and retailers in a plan similar to one pursued by Orban’s government in Hungary. Standard & Poor’s downgraded the country last month, spurring a selloff that sent the zloty to a four-year low, and Fitch Ratings warned it may follow if the new government proposes measures leading to a higher budget deficit.

The Finance Ministry plans to put the tax into effect in April and will submit the final draft of the bill after another round of consultations with the retail industry on Wednesday, spokeswoman Alina Urban said by phone on Monday. The levy, along with another tax targeting assets held by banks and insurers, is aimed at funding a government plan to increase benefits for families.

“This bill needs to serve two purposes,” Szydlo said. “It needs to level the playing field for Polish businesses and provide budget financing.”

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