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Analysis 7/2017: Bill from the state: what are our taxes spent on?

Analysis 7/2017: Bill from the state: what are our taxes spent on?

Since 2011, when FOR prepared a bill from the state for the first time, the nominal public expenditure per capita of Poland has increased from PLN 18,018 to PLN 20,214. Over 820 zł of that is the effect of price increases, and almost 1 380 zł is a real increase of state expenditure.

The share of state spending in GDP in Poland has been declining slowly, albeit steadily, since 2010. At that time public spending peaked, due to the crisis in the world economy, which forced the government to cut spending. In 2016, the share of expenditure in GDP also fell, this time as a result of the slowdown in public investment.

Pensions (31%, PLN 6,345 per capita), education (12%, PLN 2 365 per capita) and healthcare (11%, PLN 2,207 per capita) are the largest categories of state expenditure, collectively responsible for over half of it.

Social welfare spending increased alarmingly fast in the years 2011-2016. Its nominal value increased by 71%, much faster than total state expenditure (12%). The majority (65%) of the increase was due to the introduction of the 500+ Family Program that was in force for nine months of 2016. In 2017 we expect its further growth as it covers the full 12 months of the year.

The cost of servicing public debt has fallen since 2013 in line with the trend in the European Union, due to the global economic recovery. However, the interest rate of Polish public debt remains one of the highest in the EU.

The interest paid by the Polish state on public debt is still relatively high, given its level. It means that investors perceive Poland as still less credible institutionally than Western Europe.

Full analysis by FOR (in Polish) aviliable to download here.

* Cooperation in the methodology update by Tomasz Dróżdż

We also invite you to see the Bill from the State for 2016. Check how your taxes are spent!

You are welcome to contact our experts:

Aleksander Łaszek - Chief Economist at FOR

Rafał Trzeciakowski - Economist at FOR

Jan Toczyński - Economist at FOR