Tuesday

21st Nov 2017

Commission targets Poland's supermarket tax

  • Smaller Polish retailers support the tax, as it hits big businesses much harder. (Photo: msz.pl)

The European Commission has announced an in-depth investigation into a Polish tax on the retail sector, in a move that could complicate Poland’s government's domestic plans.

The EU executive is concerned that the system, which was introduced on 1 September, amounts to state aid to small retailers because it taxes big businesses more heavily.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Poland was told to suspend the levy until the commission has concluded its probe, launched on Monday (19 September).

European Parliament vice president Ryszard Czarnecki, from Poland’s ruling Law and Justice (PiS) party, denounced the probe as ”wholly political”, and said the commission was acting in the interests of Western supermarkets in Poland.

The European Commission dismissed such claims.

"The Commission has looked at the issue of progressive retail taxes before, in fact we already took a decision on a Hungarian case in July," said commission spokesman Ricardo Cardoso.

The Hungarian authorities eventually backed down and binned their tax plans.

How to finance baby subsidy

The infringement procedure makes the government’s life more difficult.

PiS is riding high in opinion polls, partly because they have promised to give generous benefits to any family with more than one child - 500 zloty (€116) for the second and every subsequent child every month.

The programme is so popular with parents that even the market liberal Modern party recently said it would support it for poorer parents. The only problem is how to finance it.

Poland’s finance minister Pawel Szalamacha last year set out to finance the programme through the retail tax, which was supposed to raise €348 million a year.

Other initiatives to help fund the scheme included a banking tax, which is still under EU scrutiny, and better collection of VAT - a recent commission report showed Poland failed to collect some 24 percent of VAT due in 2014.

Government spokesman Waldemar Grzegorczyk said Warsaw had prepared for weeks for the commission’s decision.

He said the government would present a new solution on the retail tax on Tuesday.

Warsaw may apply a flat tax, as Hungary did, but it would fall to a larger extent on domestic business and be less popular than the progressive one.

Poland may remove constitutional judges

Amid a long-lasting dispute over the functioning of Poland's constitutional court, a senior Law and Justice MP suggests removing judges who obstruct parliament.

Interview

Polish government in bid to defund NGOs

Ruling Law and Justice has promised to overhaul the NGO sector. The move could strain relations with Norway, a major donor to Polish civic life.

MEPs ponder how to fight tax havens

After the Paradise Papers brought new revelations about tax dodging across the globe, including in the EU, the European Parliament wonders how to step up the fight.

News in Brief

  1. European Banking Authority will move to Paris
  2. EU court threatens daily fine over Polish forest logging
  3. EU medicines agency will move to Milan or Amsterdam
  4. Amsterdam, Copenhagen, Milan in next round of EMA vote
  5. Three countries pull out of medicines agency Brexit race
  6. Schulz calls for new German elections
  7. EU Commission 'confident' on German stability
  8. EU adopts new border check rules

Stakeholders' Highlights

  1. Bio-Based IndustriesBio-Based Industries: European Growth is in Our Nature!
  2. Dialogue PlatformErdogan's Most Vulnerable Victims: Women and Children
  3. UNICEFEuropean Parliament Marks World Children's Day by Launching Dialogue With Children
  4. European Jewish CongressAntisemitism in Europe Today: Is It Still a Threat to Free and Open Society?
  5. Counter BalanceNew Report: Juncker Plan Backs Billions in Fossil Fuels and Carbon-Heavy Infrastructure
  6. Nordic Council of MinistersNordic countries prioritise fossil fuel subsidy reform
  7. Mission of China to the EUNew era for China brings new opportunities to all
  8. ACCASmall and Medium Sized Practices Must 'Offer the Whole Package'
  9. UNICEFAhead of the African Union - EU Summit, Survey Highlights Impact of Conflict on Education
  10. Nordic Council of MinistersNordic Council Calls for Closer Co-Operation on Foreign Policy
  11. Swedish EnterprisesTrilogue Negotiations - Striking the Balance Between Transparency and Efficiency
  12. Access EuropeProspects for US-EU Relations Under the Trump Administration - 28 November 2017