Polandís Conservative Government One Year On
December 30, 2016
Oct. 25 marked a year since Polandís conservative Law and Justice (PiS) party won parliamentary elections, beating the centrist Civic Platform (PO) and securing enough seats to form a majority government with Prime Minister Beata Szydło at the helm.
Twelve months after it seized power from the PO and its junior coalition partner Polish Peopleís Party (PSL), PiSís track record as the ruling party is a mixed bag of praise and criticism.
PiS politicians insist the past year has been a time of positive change for Poland, with the partyís leader, Jarosław Kaczyński, arguing that his men have had a lot of ďcleaning-upĒ to do after an eight-year term of the PO-PSL coalition. The opposition, meanwhile, is lashing out at PiS for ďbreaching democratic standardsĒ and for ďPutin-izingĒ the country, arguing that Poland is deviating from the principles of a united Europe and beginning to resemble Putinís Russia instead. These accusations do not seem to affect PiSís ratings in the polls while the opposition remains divided, conflicted and unable to come up with an alternative vision for the country.
Politics and society: Conflicts and disputes
The main bone of contention is the governmentís handling of the Constitutional Tribunal, Polandís highest court. Soon after taking power, PiS challenged the court by installing a group of loyal judges whom the courtís authorities have refused to acknowledge. Not long after the ruling majority pushed through a set of new rules to regulate the Tribunalís functioning, a move that the top court subsequently ruled unconstitutional. PiSís policy regarding the court has caused an outcry at home and abroad, setting the party on a collision course with EU institutions and human rights body the Council of Europe, specifically its advisory panel known as the Venice Commission. The gridlock continues with no resolution in sight.
Meanwhile, massive protests broke out nationwide after an attempt to toughen Polandís already restrictive abortion regulations that permit terminations only when the motherís life is threatened, when the fetus is severely and irreparably damaged, or when the pregnancy is a result of a crime. The protests erupted after an even more restrictive proposal was submitted to parliament by a pro-life group that provided for prison sentences for women deciding to terminate non-life-threatening pregnancies and their doctors. According to the protesters, such legislation would ďtake Poland back to the Middle Ages.Ē PiS eventually stopped short of voting through the controversial bill, but is likely to come up with other anti-abortion initiatives under pressure from the countryís powerful Roman Catholic Church.
PiS has upset many Polish teachers and parents with its plan to reform the countryís school system by disbanding middle schools and reinstating a system based on eight-grade elementary schools and four-grade high schools. The opposition has slammed the proposed reform, saying it has been poorly prepared on many levels, including financially, and is bound to cause chaos in the country.
One of the most criticized figures in the PiS Cabinet is Defense Minister Antoni Macierewicz, who has made many controversial moves and statements over the past year. He has also taken flak for his role in a failed deal to buy French-made military helicopters for Polandís armed forces. According to the opposition, the governmentís decision to terminate negotiations with Franceís Airbus Helicopters was a result of Macierewiczís dubious ties to a U.S. helicopter producer.
Macierewicz has long been throwing around accusations suggesting foul play by Moscow behind a 2010 air crash of a Polish plane near Smolensk, western Russia. Polandís then-President Lech Kaczyński, his wife and 94 other politicians, military officials and senior public figures were killed in the disaster.
Just recently, Macierewicz raised eyebrows when he accused France of secretly selling its Mistral assault ships to Russia using Egypt as a go-between.
The economy: hopes and fears
Those critical of the governmentís economic policies are eager to point out that, for the first time in history, Poland saw its credit rating lowered in January, a development that alarmed global financial markets.
However, the public at home has welcomed several of PiSís welfare programs. One of these is Family 500+, a flagship program the party promised in its election campaign. The program offers families a monthly benefit of zl.500 for each child after the first. Low-income familiesóthose with monthly incomes under zl.800 per personóare eligible for the benefit even if they have only one child. The program costs over zl.21 billion a year and has covered almost 3.8 million children nationwide so far.
Advocates argue the Family 500+ program will help avert a demographic disaster at a time when Polandís population is expected to shrink by 5 million by 2050, according to data by the countryís Central Statistical Office (GUS). Experts warn that this trend, coupled with a steady decrease in the working-age population, could destabilize Polandís retirement system. Skeptics say the 500+ program will further inflate Polandís public debt, which totaled zl.899.2 billion at the end of September, growing by almost zl.65 billion from the beginning of the year.
Before last yearís elections, PiS pledged to overhaul Polandís tax system. Over the past year, corporate income tax (CIT) has fallen from 19 percent to 15 percent for the smallest businesses with annual sales revenues under 1.2 million euros. The move is expected to benefit a total of 130,000 companies, or around 8 percent of all those registered nationwide.
The government has also levied a new tax on banks and attempted to slap a progressive tax on the retail sector. The banking tax did not pan out quite as planned. According to the latest forecasts from the Finance Ministry, it will only produce zl.3 billion in revenue for government this year instead of the originally expected zl.5.5 billion. The retail tax proved to be even more tricky after the European Commission decided it was a form of unacceptable state aid for small enterprises. As a result, the Polish government was forced to suspend the tax until 2018 and started working on a new form of levy on supermarkets. Originally, the government introduced two tax rates, 0.8 and 1.4 percent, depending on sales revenue, with a tax-free threshold of zl.204 million.
The PiS Cabinet has underperformed in its efforts to tighten up the tax system and boost value added tax (VAT) revenue by zl.19 billion, CIT revenue by zl.4.5 billion, and excise tax revenue by zl.8 billion. However, officials insist the government will manage to generate the zl.31 billion in extra revenue next year.
PiS has failed to deliver on its promise to raise the tax-free threshold for personal income tax (PIT) payers, and it has also failed to lower the retirement age and convert Swiss-franc-denominated mortgages into local currency. In her policy speech last year, Prime Minister Beata Szydło promised all these changes would be made during her Cabinetís first 100 days in office. Lower-house deputies have recently been working to lower the retirement age in response to a proposal by President Andrzej Duda. Under this proposal, women would retire at 60 years and men at 65 to replace the current rules whereby the retirement age is to gradually increase to 67 years for both sexes, by 2020 for men and by 2040 for women.
In its first year in power, PiS came up with a strategic plan for the countryís development, known as a Plan for Responsible Development, or the Morawiecki Plan, after its principal author, Deputy Prime Minister Mateusz Morawiecki. According to Morawiecki, who is also minister for development as well as finance, his plan aims to get Poland out of what is known as the middle income trap. However, the opposition argues Morawiecki lacks ideas on how the goal should be achieved. Critics are also worried the plan would result in greater state intervention in the economy.
The governmentís plans also include a program aimed at providing inexpensive apartments for rent. Depending on location, such apartments would be available for zl.10-20 per square meter a month and tenants could gradually become owners. A pilot version of the program, billed as Home+, has been launched in 17 cities, with plans to make 17,000 apartments available in total.
PiS has announced an initiative to reorganize Polandís tax system by introducing a single uniform tax combining PIT, social insurance contributions and National Health Fund premiums. The reform would usher in four or five tax brackets with the lowest tax rate at 19.52 percent and the highest at 40 percent. At the same time, the government would abolish the current 19-percent flat tax rate for self-employed individuals.
PiS still tops polls
For all the controversy over government policies, the voting public seems to be unwavering in its support of the ruling party, whose ratings reach 40 percent in some surveys. PiS may have been unable to increase its supporter base, but its rivals barely manage 20 percent in the polls. The Nowoczesna party, led by economist Ryszard Petru, has outdistanced other opposition parties in recent months and is now several points ahead of the PO. Opinion polls are showing that the only other party that could easily make it into parliament is Kukiz 15, led by rock star-turned-politician Paweł Kukiz. The rural-based Polish Peopleís Party is balancing on the edge of the 5-percent threshold needed to enter parliament, and the same goes for the leftist Democratic Left Alliance (SLD), which failed to secure a single parliamentary seat last year.