Poland’s new zero-income tax policy to encourage more people to have children should raise eyebrows among Australian parents.
But its effectiveness in rebuilding the country’s population by encouraging more Poles to have children or return home from living overseas remains to be seen, because Poland has tried plenty of “family-friendly” incentives in the past.
President Karol Nawrocki signed the new law allowing parents raising at least two children to pay zero personal income tax for families earning up to 140,000 zloty (AU$58,000) in mid-October, having initially signed the bill on 8 August in line with promises to introduce the tax relief in the first days of his presidency.
The incentive is available to parents with parental duties, legal guardians (as long as the child lives with them), foster parents, and people supporting adult children who are still studying (up to the age of 25). Poland does not recognise marriage or civil unions of same-sex couples and their families.
The right-wing Nawrocki ran for president on a “Poland first” platform, embodying his party’s traditional, patriotic values. His zero-tax incentive was a key pillar of his presidential campaign.
Poland’s birth rate has fallen to 1.18 births per woman in recent years, one of the lowest in the world. Its overall population has also been shrinking to now just 37 million.
As such, Nawrocki wants to bring back some of the estimated 20 million Poles now living abroad, and for those already home to have more children.
You can likely guess his views on using immigration to build back the population. He has previously stated, “We want Poles here, not illegal migrants”.
Prior to his election, Nawrocki declared that “Taxes must be low, simple and family-friendly” and then in August that the personal income tax exemption is not only his promise “but also my obligation to the continued existence of Poland and the independence of the Polish state.”
The president’s other tax package includes abolishing the capital gains tax, introducing a quota-based pension indexation and reducing Value Added Tax from 23 per cent to 22 per cent.
Will the tax relief inspire more parents to have kids?
The zero personal income incentive for having children could put the equivalent of just over $100 a week in the pockets of eligible families.
It’s a figure that could certainly help ease the cost of living, but hardly makes up for the costs of having a second, third, or more children.
Also, the sustainability of the President’s “tax armour” plan is also being questioned, and not something families will want to bet on being available for the long run.
While the president claims his overall tax plan is possible thanks to identified budget savings, economists are not all convinced, with some noting that the lowest-income-earning families will benefit the least, especially those who pay little or no income tax.
Further, Poland’s falling birth rate and population could be about more than the cost and desire to have a child.
Polish social scientist Anna Gromada recently wrote that she thought the problem with Poland’s dwindling birth rate was a lack of childcare, housing out of reach and a precarious jobs market. But in the decade since, unemployment has fallen to its lowest levels, incomes have risen, and childcare places have increased, while other incentives have been offered to support families, including cash payments.
So far, these “family-friendly” incentives have not been enough to lift the birth rate.
As such, Gromada now believes other forces are at play. She puts the current low birthrate down to the loneliness epidemic, an ideological and geographical gender divide and more young people choosing to remain single. “Poland’s baby deficit is not something that can be remedied by cash bonuses, cheaper mortgages or subsidised creches,” she wrote in The Guardian.
“What’s faltering in the first place is not the willingness to raise a child but the capacity to build a life with someone.”