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The Warsaw Voice » Politics » December 21, 2011
Politics & Society
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Time to Tighten Belts, Says Tusk
December 21, 2011   
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A raft of tough reforms announced by Prime Minister Donald Tusk in a policy speech in parliament Nov. 18 will force citizens to tighten their belts and may trigger protests by various groups in society, many commentators say.

Poles will have to “take a flexible approach” in 2012, Tusk warned deputies, adding that changes were essential. In his policy speech, the prime minister focused on socioeconomic issues and the fight against the crisis. He said that all the efforts of the government and parliament must be focused primarily on the security and well-being of every citizen.

“This storm of financial crisis raging around us threatens the security of the most developed countries,” said Tusk. He added that 2012 may be the most critical year when it comes to international turbulence. Unpopular measures will have to be taken that will require sacrifice from everyone, Tusk said.

According to Tusk, Poland’s success and future will primarily depend on cooperation between the government, the president, parliament and all the institutions responsible for safeguarding financial security.

The main points of the prime minister’s reform strategy apply to the pension and insurance systems, including the abolition of various forms of preferential treatment and privileges for selected occupational groups.

Tusk announced a gradual equalization and increase of the retirement age for men and women beginning 2013, ultimately to 67 years of age. “Every four months we will shift the retirement age by another month, which means that each year we will work three months more. Which will mean that we will reach this level of 67 years in 2020 as regards men and in 2040 as regards women,” said Tusk, adding that thanks to these changes the state will no longer be excessively in debt. According to Tusk, by 2020, with the introduction of the planned changes to the pension system, public debt will drop to 44 percent of GDP, followed by 40 percent of GDP in 2030, and 35 percent in 2040.

Tusk also announced an increase of the pension contribution to be paid by employers by 2 percentage points.

One of the most controversial problems of Poland’s insurance system for many years has been the Farmers’ Social Insurance Fund (KRUS), criticized by everyone except those working in agriculture. Tusk said that from February 2012 the government will propose changes to the health insurance system for farmers. “The state will continue, as it does right now, to pay the contribution for the farmers with the lowest income, that is in the case of farms below 6 hectares,” he said. “Farmers with 6 to 15 hectares will pay half of the contribution which is today paid by self-employed persons operating outside agriculture. Farmers with more than 15 hectares will pay the full contribution.” In this way one of the most glaring inequalities in the social security system is expected to be removed.

Tusk added that agriculture, “despite its specific nature, which we do respect, is a form of economic activity,” and therefore “starting from 2013 we will impose the obligation to keep accounting books by farmers and then taxation of their income under the general principles.”

Tusk also announced the introduction of a limit on income tax breaks for taxpayers with children. Under the new rules, those whose annual income exceeds zl.85,000 and have only one child will no longer be eligible for this tax break; they will be able to take advantage of it only if they have more children in the future.

Another proposed change in the retirement system applies to those who join the army and police from the beginning of 2012. The pensionable age for these would be set at 55 years, and the term of service at 25 years. Tusk called for a “review” of privileged groups when it comes to pensions—including soldiers and policemen, customs officers, border guards, miners, prosecutors and judges. However, any decisions regarding the uniformed services will only apply to those joining these services as of the beginning of 2012, Tusk said.

According to Tusk, the clergy should also contribute to the general social security system. The conditions of social insurance for priests need to be modified, he said, even if this requires changes to the existing Concordat agreement between Poland and the Vatican.

The government intends to maintain the so-called NATO rate, meaning military expenditure at the level of 1.95 percent of GDP, Tusk said. In July 2012, each soldier as well as policeman will get a monthly pay raise of about zl.300.

Tusk also said that his government will continue the process of streamlining the administration and deregulation. He said government ministers will have to precisely plan and submit reports on the deregulatory effects of each key project for which they are responsible.

The work, patience and responsibility of the Polish people have enabled the country to safely navigate through a difficult time of financial crisis, Tusk said. He added that “throughout those four years, Poland has managed to survive... the global crisis” and emerge in good shape, even while the crisis had threatened developed countries “in a manner hitherto unknown in recent history.”

Tusk barely mentioned foreign policy in his speech. He said that the government intended to work for the strongest possible position of Poland “in the very heart of the European Union.”
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