Polish Economic Society Council Opposes Government Bill on Healthcare Funding
The Council of the Polish Economic Society opposes the proposed government bill amending the Act on Healthcare Benefits Financed from Public Funds and several other statutes. In our assessment, the project is harmful as it significantly increases the disparity in taxation between business activities and employment contracts, while also exacerbating the deficit in the public finance sector. We draw attention to the fact that the government is facing the challenge of exceeding the constitutional limit of public debt (60% of GDP), and the European Commission has initiated a procedure for excessive deficit against Poland. The lack of prior consultation on the project is also perplexing.
Under the current legal framework, entrepreneurs settling on a tax scale pay a health insurance contribution of 9% of their income, while those opting for a flat tax pay 4.9% of their income. Entrepreneurs with a lump-sum PIT pay a 9% contribution based on the average wage in the business sector in the fourth quarter of the previous year, which depends on their revenue (for instance, if revenues do not exceed 60,000 PLN, the base is set at 60% of the average wage).
The government’s proposed law suggests changing the calculation of health insurance contributions by establishing a lump-sum component, computed at 75% of the minimum wage, and a real component to be calculated based on incomes exceeding the average monthly wage in the business sector in the previous year’s fourth quarter. For lump-sum taxpayers, this will amount to 1.5 times the wage, while for entrepreneurs settling under the tax scale or flat tax, it will be three times the wage.
One of the main sources of the proliferation of self-employment in Poland is the lack of neutrality in the tax and contribution system. The same business activity can be subject to entirely different public burdens solely based on the type of agreement concluded. As indicated by Marek Skawiński, chief economist of portal XYZ and former director of the Department of Macroeconomic Analysis at the Ministry of Finance, under the new proposal, for those earning above the average by 2026, choosing business activity instead of an employment contract will result in at least a one-third reduction in burdens. Consequently, many individuals will start opting for business activity over employment contracts purely due to the tax and contribution preferences. Simultaneously, not all job positions can feasibly shift from an employment contract to business activity (e.g., due to regulatory reasons), which will create unjustified inequality among de facto identical taxpayers. According to the Council of TEP, the government should move in the opposite direction—seeking to maximize uniformity in taxation within the tax and contribution system, for example, by removing various exemptions and privileges, such as the ability to deduct 50% of expenses related to copyright income in work contracts or preferential taxation in the IT sector and other areas burdened by significantly differing lump-sum rates.
According to estimates from the Government Legislation Centre, the reform is expected to cost public finances about 4.6 billion PLN in 2026. This cost represents 0.11% of GDP and may seem small from the perspective of overall public finances. However, Poland is dangerously approaching the constitutional limit on public debt, and the country is under a procedure for excessive deficit from the European Commission, so the considered project goes against the necessity of consolidating public finances.
Moreover, the RCL document states: “The draft law has not been subject to pre-consultations. The omission of the stages of agreements, public consultations, and opinions is justified by the urgency of the proposed initiative, which aims to reduce the amount of health insurance contributions and streamline the rules for calculating health insurance contributions, and is awaited by entrepreneurs.” In the Council’s opinion, there is no reason why a law intended to take effect in 2026 should not undergo pre-consultations.
Council of the Polish Economic Society
Source: https://ceo.com.pl/rada-tep-rzadowy-projekt-zmian-w-skladkach-zdrowotnych-szkodzi-finansom-publicznym-84541
