This year, Tax Freedom Day falls even later than last year!

This year Tax Freedom Day falls even later than last year!

Tax Freedom Day is a symbolic moment when we stop working for the government and start working for ourselves and our families. During the year, we work, earn and pay taxes and contributions without separating these activities. However, if we were to pay all taxes paid during the entire year first, the day when the money, after paying all the charges imposed on it, would be a symbolic Tax Freedom Day.

Tax Freedom Day is calculated based on the ratio of the share of all public sector expenditures (i.e. state budget, local government expenditures, government earmarked funds, etc.) to Gross Domestic Product.

Andrzej Sadowski, President of the Adam Smith Center, reminds us that the Tax Freedom Day celebrated for the 31st time was initiated in Poland by Krzysztof Dzierżawski, an expert at the Adam Smith Center. The Center has been counting and presenting this day continuously since 1994. One of the missions of the Center and its experts is to bring about a change in Poland’s tax system to the most competitive one in the European Union, which, like the so-called Wilczek Act in 1988, would free Polish work and entrepreneurship, causing a similar scale of changes.

– The current tax system is increasingly not only ineffective, as evidenced by the growing so-called VAT gap, but also grossly unfair and demoralizing. Citizens are easily convinced of its injustice when buying medical insurance when traveling abroad, when the amount of the fee depends on the length of stay and the place and scope of services, and not the income from which they have to pay on the spot in Poland. The glaring illogicality of the so-called health insurance contribution after its change in the so-called Polish order, which increased the real tax burden, had a noticeable impact on electoral preferences in the parliamentary elections in 2023. The prolonged maintenance by the next government of socially and economically harmful tax changes from the so-called Polish order will not only affect its support in the polls, but above all leads to the progressive liquidation of micro-business activities in Poland. In 2023, nearly 600,000 entities suspended and liquidated their activities, which is an unprecedented process in the history of the Third Republic of Poland. The prolongation of this state of affairs by the current government will lead to the sterilization of our country of a significant part of the entrepreneurship, which until now has proven to be the best stabilizer in times of recession and economic slowdown, considering the fact that in such moments international corporations in Poland have been limiting and liquidating their activities without sentiment – emphasizes Andrzej Sadowski.

– The government’s withdrawal from the bad tax system in 2024 is incomparably easier than the withdrawal of the Soviet Union’s troops from Poland from 1991 to 1993. At any time, taxes in our country, which are currently a source of additional destabilization of social and economic activity, making it impossible to live safely and predictably, as well as to conduct business, can be turned into one of Poland’s main competitive advantages in the European Union. The rationale of the current coalition’s government should be to use it as soon as possible, and this would be one of the ways to prevent the creation of an excessive budget deficit, and above all, public debt already on the verge of being unpayable – adds the president of the Adam Smith Center.

– Delaying Tax Freedom Day poses a serious risk to the country’s future economic growth. Increasing public spending easily translates into an increase in global demand, but does not automatically mean an increase in the supply of goods. In the short term, before we observe price increases, we can expect GDP growth, but in the long term entrepreneurs will meet the needs reported by the public sector, not by consumers. Basing economic growth on this model is simply risky, especially since the less sense of the real needs of the population and the ability to meet them have the people redistributing funds. The current period could be an excellent opportunity for a cheaper repayment of foreign debt, but with growing spending and the implementation of the excessive deficit procedure, the chance for this is unfortunately receding – notes Dr. Kamil Zubelewicz from Collegium Civitas, former member of the Monetary Policy Council.

According to Anna Gołębicka, an expert at the Adam Smith Center, there is nothing more certain in life than death and taxes. – Taxes have to be paid, but why so much? And here the Laffer curve comes to mind, which shows that another tax increase will eventually result in a decrease in revenues to the state budget. Together with the changes introduced by the so-called Polish order, we are heading dangerously in this direction. And it is not about the amount of taxes and so-called contributions themselves, but about the sense of injustice in paying them and their purpose. Tax is not a subscription and quite often it is not equivalent, but when for 9% of the so-called health insurance contribution we get not a service, but a queue to see a doctor, then we experience that the system is clearly unfair, despite the tax paid earlier, which is not a small amount. Additionally, tax payers notice that their work is not appreciated, and those who work and pay taxes honestly are not respected. Reducing tax changes mainly to buying votes destroys the honesty and diligence that has been common so far, Gołębicka emphasizes.

According to Prof. Adam Mariański, president of the Polish Institute of Legal and Economic Analysis and director of the Center for Tax Thought at Lazarski University, “Tax Freedom Day should be a joyful day, because then we regain freedom as individuals.” – Meanwhile, year by year our freedom, not only in terms of increasing tax burdens, is decreasing. The Polish tax system strongly interferes with individual freedom and economic freedom. This is the result of politicians’ populism, especially when they refer to the so-called social justice. Meanwhile, there is nothing more unjust than social justice. It is based on subjective views, impressions and assessments independent of the hard work and entrepreneurship of an individual. This leads to injustice consisting in the arbitrary determination by the tax ruler of the amount of tax burdens – adds Prof. Mariański.