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The Warsaw Voice » Business » August 29, 2012
Business & Economy
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Taxman Takes Quarter of Poles’ Wages
August 29, 2012   
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Personal income tax (PIT) and social insurance contributions swallow up a quarter of Poles’ monthly wages, according to the Personal Tax in the European Union report by professional services firm PricewaterhouseCoopers (PwC).

The report examines the impact of personal taxation on taxpayers’ incomes across the European Union. Poland is close to the EU average, while citizens in Cyprus, Malta, Slovakia and some other countries where taxes are lowest take home the largest proportion of their monthly earnings.

In Poland, the average net monthly income after taxes and social insurance contributions accounts for 75 percent of the gross income and is close to the EU average of 76 percent. Social insurance contributions represent the largest chunk of the Polish people’s earnings taken by the state, at 13 percent. Social insurance contributions are the highest in France, Estonia and the Czech Republic, and the lowest in Denmark.

Around 11 percent of the average monthly wage in Poland goes toward PIT. “Cyprus and Malta are the countries which allow their taxpayers to keep the highest net incomes, meaning wages that people take home,” Joanna Narkiewicz-Tar³owska, a senior manager at PwC, told the Newseria news agency. She added that net incomes were also high in countries with flat tax rates, including Slovakia, the Czech Republic, Bulgaria, Romania, Lithuania, Latvia and Estonia. Taxpayers in these countries take home around 80 percent of their monthly wages. It is worth noting that the average net wage taken home by people in countries with flat tax rates is 5 percent higher than in countries with progressive taxation—79 percent versus 74 percent, PwC says.

The findings of this year’s research are similar to those last year, although several countries have made changes to their tax systems. But PwC experts say it is possible to expect that some European governments, including those in the Czech Republic, Portugal and Italy, will have to raise taxes because of the continued economic downturn and the resulting problems for the national budgets. An exception is Latvia, which plans to lower taxes by 5 percentage points in the near future.
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