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The distributional impact of taxes and transfers in Poland (English)

This paper assesses the impact of fiscal policy on the incidence, depth, and severity of poverty, and examines whether there is room for an increased role for fiscal policy in improving the wellbeing of the poor. The results show that the combined effect of taxes and social spending helped substantially to reduce poverty and inequality in Poland in 2014, in line with other European Union countries, with most of the reduction largely being achieved by pensions. However, in cash terms, households beginning in the second decile were net payers to the treasury in 2014, as the share of taxes paid exceeded the cash benefits received for all but the poorest 10 percent of the population. Although the Polish fiscal system in 2014 had the capacity to redistribute, it had a relatively weak capacity to reduce poverty given the resources at its disposal, and this was especially true for families with children. Microsimulations of the introduction of the Family 500 program in 2016 show the redistributive and poverty reduction impacts of the new program, even after taking into account the potential increase in indirect taxes. Finally, alternative reforms of the tax-free allowance are considered, and estimates of their likely impact on poverty, inequality, and the potential fiscal cost are presented. The simulations show that there are potential efficiency gains from further targeting each of these new initiatives.

Details

  • Author

    Goraus Tanska,Karolina Marta, Inchauste Comboni,Maria Gabriela

  • Document Date

    2016/08/09

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS7787

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Poland,

  • Region

    Europe and Central Asia,

  • Disclosure Date

    2016/08/09

  • Disclosure Status

    Disclosed

  • Doc Name

    The distributional impact of taxes and transfers in Poland

  • Keywords

    Poverty and Equity;social spending;personal income tax;impact on market;old-age pension;social security contribution;disposable income;Poverty & Inequality;contributory pension;contribution to poverty reduction;cost of health services;effects of tax reform;incidence of public spending;general government expenditure;structure of tax revenues;health insurance contributions;education and health;market income;deferred income;impact of tax;total tax collection;fiscal policy;excise tax;Fiscal policies;child tax credit;extreme poverty line;effect of taxes;unemployment benefit;social contribution;number of pupils;structure of taxes;impact on poverty;corporate profit tax;social protection system;social insurance contribution;family benefit;disability pension;direct transfer;supply of good;returns to capital;access to health;market income inequality;land holding size;mandatory health insurance;definitions of income;fiscal incidence analysis;agricultural income tax;tax incidence analysis;health service provider;cost of service;social insurance scheme;households with income;place of residence;reduction in poverty;guarantee payment;means tested benefit;source of revenue;total gross value;sale of share;export of goods;poverty reduction impact;families with child;household survey data;incidence of tax;social insurance benefit;per capita income;social assistance program;high poverty line;categories of taxes;decline in poverty;equality of opportunity;cost of insurance;public university subsidy;impact of education;public health insurance;Voluntary Health Insurance;high school student;income and expenditure;households with child;social protection program;consumption of alcohol;agricultural tax;regressive tax;single parent;social pension;housing benefit;flat tax;government spending;private institution;poverty increase;land size;cash benefit;global income;cash term;fiscal instrument;fiscal system;retirement pension;age structure;flat rate;health contribution;sickness insurance;household consumption;capital tax;gross wage;disabled child;child birth;deferred saving;income concepts;maternity benefit;benefit system;labor supply;poverty headcount;poverty gap;public finance;reducing inequality;capital gain;internationally comparable;individual household;simulation model;accident insurance;poverty give;poor household;redistributive impact;excise duty;income earner;tax allowance;fiscal cost;lump sum;Private School;taxable base;educational institution;administrative datum;private insurance;contributory benefits;increase poverty;redistributive effect;concentration coefficient;vat rate;intermediate product;statutory rates;farmer;university student;input cost;primary care;school type;educational enrolment;school base;household expenditure;general equilibrium;survivor pension;local taxes;sickness allowance;funeral grant;tobacco product;total consumption;farming activity;financial problem;prolonged illness;asset accumulation;intra-household distribution;future pension;tax shift;subsistence minimum;low-income household;poverty severity;open access;development policy;transfer market;measure of use;headcount rate;rehabilitation allowance;positive marginal;alternative scenarios;deficit rule;important change;low-income family;higher inequality;pension contribution;efficiency gain;cultural services;small entrepreneur;poverty effect;inequality decline;inequality indicator;cash position;energy product;observed change;alcoholic beverage;employee hire;investment income;agricultural production;tax burden;average wage;retirement plan;corporate tax;civil law;international transportation;gross income;climatic condition;low-value contract;consumption tax;maternity leave;minimum wage;tax liability;arable land;revenue account;catering services;inheritance tax;family care;bill payment;rehabilitation costs;social group;specialized services;partial equilibrium;dependent children;early detection;public system;disability prevention;educational subsidy;dental services

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Citation

Goraus Tanska,Karolina Marta Inchauste Comboni,Maria Gabriela

The distributional impact of taxes and transfers in Poland (English). Policy Research working paper,no. WPS 7787 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/313241470746907231/The-distributional-impact-of-taxes-and-transfers-in-Poland