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It has been possible to reduce the tax on clothes and footwear for children for a year now.  But the government says no

It has been possible to reduce the tax on clothes and footwear for children for a year now. But the government says no

A year ago, the European Union made it possible to lower the VAT rate, e.g. for children’s clothing and footwear, thanks to which parents of toddlers could pay much less for these products. However, the Polish government did not use this option. Perhaps the situation will change during the upcoming elections.

Recently, the topic of reducing the VAT rate on clothing and footwear for children has returned. In the past, politicians have repeatedly declared their willingness to lower the tax, so now it is possible that the topic will also appear during the next election campaign. The subject of taxes and lowering the cost of living for children or any benefits for children are a great way to promote a pro-family policy and encourage Poles to start families.

– In my opinion, the government should seriously approach this matter before the elections, because it would be to the benefit of citizens, especially for families with many children. However, this is unlikely to happen, because hardly anyone talks about it out loud at all – explains Maciej Tygielski, a long-time retail market expert from the SkipWish Group, in an interview with Monday News.

The government does not plan for Poles to pay less for products for children

From April 6, 2022, a new system has been in force that allows you to reduce the VAT rate. The European Commission emphasizes that under this solution, Member States have the option of applying two reductions of up to 5%. for goods and services. The rate change applies to a maximum of 24 categories, including e.g. children’s clothing and footwear.

Another novelty is that countries can apply a single reduced rate, which is lower than 5%. and one so-called “zero rate”. This provision applies to, for example, foodstuffs, medicines or pharmaceutical products. Despite such favorable solutions, they will not be introduced in Poland for the time being. “In Poland, the basic rate, i.e. 23 percent, is currently applied to clothing and footwear for children. Currently, no legislative work is being carried out to reduce the rate for these goods” – the Ministry of Finance reports.

Anna Semmerling explains in an interview with the portal that the tax reduction is an element supporting families, but it has its consequences in the form of reduced budget revenues. “This element is well suited to the promotion of pro-family policy. But it would be another form of government support and reduction of budget revenues, which has its consequences for market phenomena, such as inflation” – says the expert.

Will the state budget suffer?

According to the study, in 2020 the value of the children’s goods market in Poland amounted to PLN 14.49 billion. – Assuming that these goods constitute approx. 20 percent. revenues from the entire sector, we are talking about PLN 2.8 billion. 23 percent VAT of which is 644 million. According to the assumptions of the budget for 2023, the revenues from this tax are to amount to PLN 286.3 billion. Thus, PLN 644 million is not even 0.5 percent. this amount – emphasizes Dr. Anna Semmerling, an expert in economics and finance from the WSB Merito University in an interview with Monday News.

However, the specialist adds that, taking into account the budget, this is not a large sum, but it is a reduction in public finance revenues. And bearing in mind the current economic and economic situation in Poland, where inflation in May this year amounted to 13 percent, according to the data of the Central Statistical Office, this is the time when we should strive to reduce the budget deficit. In practice, this means no reductions in tax rates.

According to tax advisor Jerzy Martini, the loss of profits for the state budget, which may be caused by a reduction in the VAT rate, is rather not particularly severe, especially if we take into account, for example, the introduction of an 8 percent rate. for fuel or 0 percent. for food. Maciej Tygielski, on the other hand, adds that “the cost of maintaining children in Poland is getting higher. Today, consumers are often seen to be conservative and careful. Before they buy something, they watch the money spent five times. And this mainly affects families. would give some relief in that regard.”

Reducing the VAT rate is not synonymous with a lower price of the product in the store

– The answer to the question whether parents will benefit from the reduction of the VAT rate is difficult to predict. Reducing the rate means that the taxpayer must apply it, but it does not impose an obligation on the seller to reduce the price for the consumer. It is possible to imagine that the net price may increase at a lower rate and the gross price will remain, for example, at the same level – explains prof. Witold Modzelewski, former Deputy Minister of Finance.

Reducing the VAT rate for individual product categories is controversial, as is granting subsidies or various types of benefits only to selected social groups. In addition, tax changes with such high inflation, 14.7 percent. in April and 13 percent. in May raise doubts. On the other hand, the improvement of the demographic situation should be a priority, and every manifestation of strengthening the pro-family policy should be treated with great attention. Since EU regulations allow the use of reduced rates, we should be all the more interested in introducing such solutions in Poland.

Source: Gazeta

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