the state and perspectives of green budget reform in poland michał dybiec andrzej kassenberg...
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The state and perspectives of green budget reform in Poland
Michał Dybiec
Andrzej Kassenberg
Wojciech Stodulski
Institute for Sustainable Development
Warsaw, Poland
International Conference
Environmentally harmful subsidies and ways to eliminate them2-3 September 2004, Budapest
Basic macroeconomic indices in Poland 2001-2004Specification
(current rate 1USD=3,67PLN)
Unit 2001 2002 2003 2004 forecast
Real processes
GDP % 101,0 101,4 103,8 105,0
Exports % 103,1 104,8 114,7 108,7
Imports % 94,7 102,6 109,3 108,5
Consumption % 101,7 102,7 102,5 103,3
Gross capital formation % 87,4 93,2 102,0 112,0
GDP in current prices PLN bln 760,6 781,1 814,7 861,5
Prices
Price indices of goods and services % 105,5 101,9 100,8 102,0
Wages and salaries
Av.monthly gross salaries PLN 2045 2098 2201 2290
Av.montlhy gross retirement pay PLN 972 1039 1092 1126
Labour market
Unemployment rate % 17,5 18,1 20,0 19,5
Interest rates
Open market operations % 15,9 8,75 5,25 3,7
Balance of payments
Current account US mln -7166 -6700 -4018 -8400
FDI US mln 6928 3789 3702 5150
State Budget 2002-2004 Incomes(billions PLN)
2002 performed
2003 performed
2004 planned
REVENUE TOTAL 143,6 152,1 152,71.Tax revenue 128,8 135,3 135,0 1.1 Indirect taxes 89,6 95,4 103,1 1.1.1 VAT 57,4 60,4 67,6 1.1.2 Excise tax, of which on: 31,5 34,4 34,6 a) spirits 3,9 4,1 n.a. b) motor fuels 13,8 14,8 n.a. c) tobacco products 7,9 8,4 n.a. d) beer 2,1 2,2 n.a. e) electricity 1,6 2,5 n.a. f) other 2,2 2,4 n.a. 1.1.3. Tax on games of chance/mutual betting 0,7 0,7 0,9 1.2.Income tax, of which on: 1.2.1 Corporate income tax 15,0 14,1 10,3 1.2.2 Personal income tax 24,1 25,7 21,62.Non-tax revenue 14,3 16,7 15,13.Foreign revenue 0,5 0,1 0,14.Compensation from the EU budget x x 2,5
State budget 2003 – tax revenues
33,2%
2,3%11,8%
14,6%
21,5%
4,6%1,2%1,4%
1,3%8,1%
VAT spiritsmotor fuels tobacco productsbeer electricityother excise tax corporate income taxpersonal income tax other revenues
State Budget 2002-2004 Expenditures (billions PLN)
2002 performed
2003 performed
2004 planned
EXPENDITURES TOTAL 182,9 191,9 198,31.Allocation of subsidies, of which: 104,4 100,4 95,6 1.1 Subjective allocations 11,8 12,5 12,7 1.2 Allocation to objective funds: 47,4 51,5 41,5 1.2.1 Social Insurance Fund 27,1 30,8 20,1 1.2.2 Pension Fund 15,4 15,0 15,1 1.2.3 Labour Fund 3,6 3,9 3,1 1.3 Apprioprate allocations to self-government
13,9 9,9 5,8
1.4 General subsidies for local self-government
29,7 32,0 31,1
2.Benefits for natural persons 15,1 16,4 17,63.Current expenditure of budgetary entites of which:
29,8 34,6 40,3
3.1 Wages and salaries 17,7 18,8 22,94.Public debt servicing 24,0 24,1 26,8 4.1 Domestic 20,3 20,4 21,0 4.2 Foreign 3,7 3,7 5,85.Investment expenditure 7,8 6,7 9,96. DEFICIT 39,4 37,0 45,5
Environmental investment in Poland
0
2
4
6
8
10
1997 1998 1999 2000 2001 2002
billi
on P
LN (c
urre
nt
pric
es)
0
0,5
1
1,5
2
% o
f GD
P
Investment GDP share
EFR in Poland pros and cons
PROS• High GDP growth
• High unemployment
• Needs for extra funds for implementation of EU-law
• High costs of labour
• High extent of subsidisation
• Low level of costs internalization
• Low level of innovation in the economy
CONS• High budget deficit• High public debt servicing• High budget allocations to
Social Insurance Fund and Pension Fund
• Relative small share of revenues from excise tax in the state budget
• Relative small impact on labour market
• Economic weakness of enterprises and households
Selected tendencies in relation to EFR and harmful subsidies
Transport Excise tax removal – new registration fees. Vignette removal
Coal mining Energy
Harmful subsidies – coal mining
In the 90s – direct subsidies and debt forgiveness of 34 billions PLN (in real prices of 2001– av. yearly total state aid ca. 11 bio.)
Restructuring programme for 2004-10 : subsidies of almost 10 billions PLN.
Unknown extent of hidden subsidies: organizational structure of the sector.
Financial results of coal companies vs. rationale for state aid.
Harmful subsidies – energy
Main area of concern – long-term contracts (KDT). Underwritten between Polish Power Grid and energy
companies. Partly for restructuring and modernization programmes. Today 40% of domestic energy production under KDT. 25 billions PLN for contracts removal.
NAP – 35% more emission allowed than resulting from approved Climate Policy
Excise tax rates on energy carriers in Poland 2004 (1EUR=4,44PLN)Specification Unit Tax rate (PLN)
Gasoline 94, 98 and their basic petrol 1000 l 1690
Unleaded petrol 1000 l 1464
Motor oil, of which those with sulphur content
1000 l 1141
- more than 0,005% up to 0,035% 1000 l 1063
- up to 0,005% 1000 l 1014
Aircraft fuels for jet turbin engines 1000 l 1037
Aircraft fuels for pistone engines 1000 l 1762
Heating oils 1000 l 197
LPG for cars 1000 kg 630
Electricity MWh 20
Excise tax – hidden subsidies
Natural gas – could be excluded from excise tax up to 2013.
Coal – 50% of excise tax rate to be reached up to 2007, 100% up to 2010.
Diesel fuel – full tax rate to be reached before 2011.
No excise tax for heavy heating oil and coke.
VAT – hidden subsidies Basic VAT rate – 22% Good and services on which preferential rate 3% is
imposed (up to 30.04.2008) Nitrogen fertilizers Phosphorus fertilizers Potassium fertilizers Pesticides and other agrochemicals Wood extraction services
Services on which preferential rate 7% is imposed Taxi services Passenger road transport services Air travels
ISD’s activity on ETR/EFR• 1996 two international conferences for
environmental NGO from CEE• 2000-2002 project on ETR with secenarios
development • From 2000 particpation in EEB campaign• 2003 – international conference with World Bank• 2002-2004 – two projects with Clean Air Action
Group (REC, Hungarian Access)---------------------------------------------------------------
Small groups of scientist work on ETR/EFR in Warsaw University and Cracow School of
Economics
Scenarios for EFR in Poland - conclusions
Double dividend (positive results for environment and employment) is very difficult to project and achieve.
The impact of tax reform on inflation and increase of production costs is not significant – real prices of majority of goods will not change.
Welfare of households should not decrease. Supportive role of EFR for the system of
environmental fees in Poland.
Who is for, who is againstFOR
• Ministry of Environment• Environmental NGOs• Some environmental
economists• Greens 2004• Environmental investment
market
POTENTIALLY FOR• Biofuel and Renewable
Energy producers• Public transport sector
AGAINST• Ministry of Economy and
Labour • Ministry of Finan• Energy and mining sector
UNCONVINCED• Env. Commission in Parliament• Some bussines organisations• Some environmental experts• Trade Unions• Regional and local self-
government
Next steps
• Establishing the Polish-German committee for implementation of EFR
• Debate in parliamentary environmental commission on EFR
• Polish-German workshop on subsidies harmful to the environment (generally and in energy sector)
Thank you for your attention
Institute for Sustainable Development
Web: www.ine-isd.org.pl
E-mail: [email protected]