Today, the Finance Minister unveiled his long-anticipated proposals regarding reforms to the so-called Belka tax (capital gains tax). The catch? No actual changes to the tax were announced. Instead, a new investment product was introduced, designed to bypass the much-hated tax by investors. Across the Atlantic, the market is already confident about an interest rate cut in the U.S. this September.
From a Big Storm… to a Small Drizzle
We waited a year and a half for the announcement of changes to the Belka tax, first promised during the election campaign. Nearly 20 months of announcements, leaks, building tension, and repeatedly postponed deadlines. The tax was supposed to be abolished, reduced, a tax-free allowance or progressive rates introduced. But when the Finance Minister finally spoke to the public, it turned out the tax stays. And that’s probably the biggest problem of the current government: managing expectations at what is probably a historically low level.
Looking at it with some cool detachment, the solution presented is undeniably a step in the right direction. Maybe too small, maybe poorly packaged, maybe a bit too complicated, but at the end of the day, most of society will get the chance to avoid paying one of the most toxic levies in our legal system.
OKI, OKI
The Personal Investment Account — the program announced today by Minister Domański — allows investing up to 100,000 PLN without paying capital gains tax. In other words, the naysayers actually got something equivalent to a tax-free allowance. Of this amount, 25,000 PLN can be classified as savings (e.g., held in deposits), and the rest should go to the capital market. So this is a solution supporting the domestic stock market, which has long been demanded.
However, the rather convoluted idea of switching to an asset tax once the 100,000 PLN threshold is exceeded looks surprising. It is important to remember that previous solutions like IKE (Individual Retirement Account) or IKZE (Individual Pension Security Account) will continue unchanged.
What looks poor is the requirement that only cash can be contributed to the program. This seems like a nod to brokerage houses, which could charge double commissions when transferring funds. We could afford to allow transferring existing assets from one account to another. Quoting the classic, this is not rocket science.
Interest Rate Cut in the U.S. Confirmed?
Polish financial analysts can focus even more on criticizing Minister Domański’s idea since there is a lack of new impulses globally to divert attention. Today’s wave of PMI readings, to put it colloquially, doesn’t excite anyone anymore. In Germany it rose, in France it fell, and the entire eurozone is so-so.
However, it is worth noting a drastic change in investor sentiment regarding the Federal Reserve’s September meeting. Until recently, the odds favored those betting on interest rates remaining unchanged. Today, practically the entire market (94%) is convinced a cut will happen. Goldman Sachs goes further and speculates on a third such move this year, including a possible one-time cut of 50 basis points.
Despite this, the dollar is doing fairly well today across global markets. EUR/USD fell on Tuesday to around $1.154. This translated to the dollar rising against the Polish zloty above the 3.70 PLN threshold. For EUR/PLN, we theoretically see an upward daily candle, but the rate still holds below 4.28 PLN.
Author: Krzysztof Adamczak, Currency Analyst at Walutomat.pl
Source: https://managerplus.pl/osobiste-konto-inwestycyjne-rzadowy-sposob-na-unikniecie-podatku-belki-38603
