Analysis 18/2016: The Act on National Fiscal Administration - another blow to the taxpayer
Where does the weakness of tax administration come from?
Overshadowed by media leaks about plans of single tax and changes in VAT, another - at least equally important - legislative process goes on. It concerns the new rules governing the administration responsible for collecting taxes and enforcing tax law, included in the laws passed on 21 October: the National Fiscal Administration Act (KAS Act) and a separate act containing implementing provisions of the KAS Act.
While the tax rates or VAT gap are topics more likely to absorb public opinion, for the proper functioning of the tax system, the size of budget tax revenues, business conditions, the legal security of citizens and the foundations of economic development, proper operation of the fiscal apparatus is even more important.
The adopted law:
• does not alter the overly fragmented system of control procedures applied to taxpayers by the tax authorities, and so treasury resources will still be unable to concentrate on prevention of serious pathologies;
• as the panacea for all the ills of the fiscal system it introduces reorganization - merging, dissolving, and creating new offices – although the current organizational structure has very little relevance to these problems;
• increases the submissiveness and subordination of the tax apparatus to the ruling party, as it allows for a large-scale purge at all managerial positions of the tax apparatus, the Ministry of Finance, customs and tax chambers. Competitions for managerial positions are no longer mandatory;
• does not provide for any objective and credible mechanisms for periodic assessments of treasury staff;
• does not introduce any significant new means to facilitate the circulation of information and data within the tax system, or between this apparatus and the taxpayer;
• eliminates the requirement of fiscal secrecy for specific (police) powers of the National Tax Administration and Customs officers, undermining the basis of the system of personal data protection;
• excludes the application of the provisions of the Freedom of Economic Activity Act to customs and fiscal control of an entrepreneur;
• makes appeals against post-control decisions purely fictitious, making it difficult for the taxpayer to enforce his / her rights and burdening the courts with excessive number of litigations on tax matters.
The deep dysfunction of the Polish tax system is confirmed not only by the daily experiences of taxpayers and even opinions of the tax administration staff themselves - which can be found e.g. on www.skarbowcy.pl - but also by international comparisons. The graphs show that the ratio of the cost of collecting taxes to tax revenues is in Poland almost the highest in OECD. At the same time, the value of tax collected per single tax officer is the lowest in Poland.
Full analysis (in Polish) is aviliable here.
prof. Dariusz Adamski, Professor of Law at Wroclaw Uniwersity, Project Coordinator LepszePodatki.pl
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