The mayor of Warsaw, Rafał Trzaskowski, after the entry into force of the amendment to the Income Tax Act (PIT), increased the tax-free amount by 10 times and reduced the basic rate of this tax from 17 percent. up to 12 percent at numerous press conferences, he even threatened a catastrophe for the capital’s finances.
Other major city mayors behaved in a similar manner, mostly coming from the Civic Platform, even organizing street protests in Warsaw, claiming that their cities’ finances would not recover with this significant PIT cut.
During numerous debates with the participation of local government officials, their experts presented data on how local government finances will suffer as a result of the PIT cut, forgetting that this will keep more money in their residents’ pockets.
Surplus instead of deficit
Just yesterday, the City of Warsaw informed about the preliminary results of the implementation of the budget for 2022, which shows that instead of the expected deficit of almost PLN 2.9 billion, the budget ended with a surplus of almost PLN 0.5 billion .
It turned out that budget revenues (including tax revenues) were as much as PLN 2.5 billion higher than planned (planned PLN 19.1 billion, implemented PLN 21.6 billion), PLN 0.9 billion PLN were also lower than planned.
In total, President Trzaskowski made a mistake of no less than PLN 3.4 billion in the budget for 2022, an equally big mistake also affected Warsaw’s budget for 2021, instead of the planned deficit of PLN 1 billion, a surplus of 1. 3 billion PLN achieved.
The fact that PO local government officials attacked the government for the PIT cut and threatened the residents of their cities with financial disaster was part of the party’s anti-government campaign, but it was already clear in autumn last year that the arguments they used had little to do with reality.
Let us remind you that only at the beginning of September last year, the Ministry of Finance provided data on the financial situation of all local government units (municipalities, poviats and voivodeships) for the first half of this year, taken from reports on the implementation of their budgets , prepared by the local government units themselves (data for the whole of 2022 for all LGUs will be published by the Ministry of Finance in the middle of this year).
They showed that after the first half of the year, all local government units achieved PLN 170.8 billion in total revenue and PLN 156.4 billion in total expenditure, meaning they generated a budget surplus of PLN 14.4 billion.
The financial situation of local governments was even better in terms of current income and expenditure (i.e. without taking into account income and expenditure related to real estate), in this case the so-called operating surplus amounted to PLN 20.5 billion.
Already at the end of the first half of the previous year, local governments had a much better financial situation than at the end of the PO-PSL government, because at the end of 2015 the budget surplus in local government units amounted to only PLN 2.6 billion, and the operating surplus amounted to PLN 18.2 billion.
And despite this, local government officials associated with the opposition (mainly PO) protested loudly, claiming that further cuts in the CIT and PIT taxes, in which local governments have a stake, will collapse their finances.
Support for local governments
Admittedly, this kind of argument undermines the essence of their mandate, since they are obliged to represent the interests of their residents, and yet tax cuts, especially PIT, leave taxpayers significant extra money in their pockets (implementation of the free amount of 30,000, reduction of the tax rate from 17% to 12 percent, or the increase of the tax threshold from PLN 85,000 to PLN 120,000 per year, left about PLN 30 billion in the pockets of the taxpayer for the previous year) .
At the same time, due to the rapidly rising prices of energy carriers, an amendment to the law on local government finances came into effect last year, providing additional strong financial support to local governments.
In total, it amounted to as much as PLN 13.7 billion, i.e. about 25% of the revenues planned for this year by local government units from their share in PIT (this year local governments had planned them at PLN 54 billion) .
Let us also remind you that at the same time the government program for strategic investments was launched, under which as much as PLN 54 billion has been transferred to local governments in 2 tranches so far, previously more than PLN 12 billion was transferred from the local National Road Fund to local governments , and funds were also transferred for the so-called post-state ownership municipalities amounting to almost PLN 3 billion, funds are also regularly transferred to local governments for investments in health care, education, sports, culture and the social sphere (in total an astronomical amount of more than PLN 85 billion).
Trzaskowski has no control over the city
It turns out that the mayor of Warsaw, Rafał Trzaskowski, is not only unable to control the sewage economy (two massive failures of the sewage collector, which resulted in the discharge of 3.7 million m3 and 10.6 million m3 of untreated sewage in the Vistula, respectively), or the waste economy (corruption scandal with the participation of the secretary of the municipal office Włodzimierz Karpiński), but also financial management.
For months, Rafał Trzaskowski threatened the inhabitants of the capital with a financial catastrophe, and after the end of the year, he announced, as never before, that budget revenues turned out to be PLN 2.5 billion higher than planned, and instead of a huge planned deficit of PLN 2.9 billion, the budget ended with a surplus of PLN 0.5 billion.
Trzaskowski, as you can see, has no time to deal with the management of Warsaw, he does not even deal with the most important matters within his competence, but he does have time to conduct foreign policy, deal with to keep up with extreme ideologies pushed by the C40. city association, or collect signatures for the initiative to liquidate TVP Info, which he will present in the Sejm tonight.
Source: wPolityce