In 2021 the bill for the Polish state had expenditure per capita for the first time that exceeded the amount of PLN 30,000 zloty. – it results from the eleventh edition of the “Account from the State” prepared by the Civic Development Forum.
In 2021, public expenditure per capita for the first time exceeded the amount of PLN 30,000 zloty. All public spending is financed either by taxes (levies) we pay or by government-issued debt (which means higher taxes in the future).
Many people, when demanding the implementation of new programs by the state, do not see that it is associated with greater taxation of society (now or in the future).
As Margaret Thatcher noted, “If a state wants to spend more, it must either borrow people’s savings or tax them more heavily. There is no such thing as public money, only taxpayers’ money.”
Bill from the Polish state
For the eleventh time, Forum Obywatelskiego Rozwoju (FOR) has prepared the “Bill from the State”, which shows the expenditure of the Polish state broken down into the most important categories and per capita.
State expenditure is not only the expenditure of the central budget (state budget), but also local authorities (local governments), the National Health Fund, the Social Insurance Fund managed by the Social Insurance Institution, KRUS and many other entities . In the last two years, a large part of public expenditure was carried out without parliamentary control – through the Polish Development Fund and Bank Gospodarstwa Krajowego.
Although the vast majority of public expenditure falls on several institutions, it should be remembered that the entire public finance sector covers over 61,000 different units. It includes schools, universities, hospitals, as well as entities such as the boards of municipal cemeteries, municipal parks or the film studios “TOR”, “ZEBRA”, “KADR”.
What did taxpayers pay the most in 2021?
As every year, pensions and disability pensions were the largest category of public expenditure. The average Polish resident spent 8,938 zlotys on them, including “thirteen” and “fourteen”. This is much more than the two consecutive categories of expenses taken together – health care (PLN 3851) and education and science (PLN 3731).
For years, in FOR we have been proposing to reduce retirement expenses by increasing the retirement age, abolishing the privilege of early retirement (with possible adjustment of the amount of contributions in the case of these professions, e.g. miners, for which a lower retirement age may be justified), the inclusion of farmers, soldiers, policemen , judges and prosecutors to the general pension system, and the abandonment of further supplements, such as the “thirteenth” and “fourteenth” pensions.
All these factors weaken the development potential of the Polish economy. Unfortunately, politicians are very eager to promise more benefits to pensioners, avoiding reforms of the system. It should be emphasised that Poland spends more on pensions than other countries of Central and Eastern Europe at a similar level of development, and at the same time is a society that is ageing very quickly.
In 2015–2021, social spending in real terms in Poland increased by almost 43%. – it was the fifth highest result in the EU (with an average of 22.3%). Social expenditure grew faster than the economy – in relation to GDP it increased by 1.7 pp On the other hand, the importance of public investments decreased, which decreased by 0.4 pp in relation to GDP
In 2021, the “bill from the state” amounted to PLN 30,736 per inhabitant of Poland and was higher by PLN 982 than in the previous year. The total public expenditure per capita in 2021 was PLN 1,300 higher than the income.
As a result, public debt per capita increased to PLN 37,405 (of which PLN 6,946 beyond the constitutional definition of debt and beyond parliamentary control) and was PLN 2,138 higher than in 2020. Due to the spiral of populism encouraged by politicians, many expenses this and next year will increase. In addition , the interest on public debt will also increase: according to the “Multiannual State Financial Plan for 2022–2025”, the interest per capita this year will amount to PLN 1258, and next year as much as PLN 1705.
Increase in public spending. Sources of funding
In 2021, public expenditure accounted for 44.2 percent GDP – less than the year before, when the pandemic broke out, but still more than in 2019. Since 2015, public spending in Poland has increased in real terms by over 35%. There are three sources of financing for this increase in expenditure.
Firstly, thanks to the good economic situation in Western Europe and the influx of workers from Ukraine, the Polish economy developed very quickly . Secondly, the PiS government introduced many new taxes , often called fees or levies for ignorance (“emission charge”, “solidarity levy”, and in addition, for example, bank tax and trade tax). The revenues of the public sector in 2015–2021 increased by 3.3%. GDP. Third, the debt of the public sector has increased.
Despite the very good economic conditions, the government failed to balance public finances. As a result, the public debt in 2015–2021 increased by 2.5% GDP. Due to the fact that interest rates were falling for a long time, it seemed that the state could get into debt with impunity. Now, however, interest is starting to rise rapidly.
According to the forecast from April this year. presented by the government in the “Multiannual State Financial Plan for 2022–2025”, the interest on the public debt is to amount to PLN 1258 per capita this year and PLN 1705 next year (for comparison, in 2021 the interest was PLN 772 per capita).
Already this year, the cost of servicing public debt will be higher than the cost of the “Rodzina 500+” program. Interest in the “State Account” will increase by almost a thousand zlotys. This is almost 1.5 times the expenditure for the police, fire brigade and other services combined, and a little less than the expenditure for the military.
Source: BusinessInsider
