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Thursday, February 22, 2024

Warsaw. Local government officials sound the alarm: our financial situation is catastrophic

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A group of local government representatives associated in the initiative “Yes! For Poland” is preparing proposals for legislative solutions, such as reducing VAT on public transport to zero or financing by the government the costs of changing the bus fleet to zero-emission. This is a package of changes that would repair the budgets of local governments in the period of rampant inflation.

As he pointed out at the beginning of the press conference Rafał Trzaskowski, the financial situation of local governments is catastrophic. – We see galloping prices and inflation. Virtually all building materials and services become more expensive. Unfortunately, the city’s operating costs are also rising. On the other hand, the revenues to our budget are decreasing. They are absolutely deliberately limited by the rulers – said Trzaskowski. He noted that this time the situation was so serious that it threatened to collapse local government budgets.

– Suspending our investment processes would have a very bad effect on the Polish economy. We all want the economy to develop as well as possible after the pandemic and in times of war, he added.

Izabelin Dorota Zmarzlak, the mayor of the commune, who was present at the conference, emphasized that the budgets of local communities work in the same way as household budgets. – With the currently raging inflation, already in the middle of the year we are sitting and wondering where to save. Just as many Poles did not go abroad, we also cancel various types of expenses – said Zmarzlak. She stressed that at the end of the year there will be many local government budgets that cannot be tightened. The smallest centers or rural communes will be in the worst situation.

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Proposal: zero VAT on communication services

Trzaskowski emphasized that in the local government movement “Yes! For Poland” a package of changes was prepared that could lead to an improvement in the financial condition of local governments. – In the package of solutions that we will present in the Senate, there will be proposals to reduce VAT on public transport services to a zero percent rate. There will also be proposals for financing from the government budget to change the zero-emission bus fleet in cities. These costs should be borne by the government, as in other European Union countries – explained the president of the capital.

– Without our investment programs, without government investments, it is difficult to talk about the implementation of common priorities of the European Union, such as the fight for clean air, fighting the climate crisis, or finally focusing on innovative and digital solutions – added Trzaskowski. – I hope that the rulers will take our proposals seriously – he concluded.

On the other hand, as Krzysztof Kosiński, the president of Ciechanów, pointed out, an important element of the changes should be the zero VAT rate for investments carried out by local governments. – Currently, the more the local government invests in the development of infrastructure for residents, the more VAT is transferred to the state budget. In a crisis situation, this money should remain in the budgets of local governments, but unfortunately it is currently consumed at the central level – said Kosiński.

Local government officials appeal for healing of finances

As we read in the announcement of the capital city hall, local government officials from the “Yes! For Poland” movement issued an “Appeal on the urgent need to heal local government finances in the face of rampant inflation.” They emphasize that inflation in the state budget was estimated at 3.3 percent. and it completely missed reality. Currently, according to official information from the Central Statistical Office, it is close to 16 percent.

“It is necessary to immediately valorize revenues, which will automatically be allocated to cover current expenses, including electricity, gas and salaries of employees in local government units. The basis for the valorization should be real revenues to the state budget from PIT and CIT taxes for the previous year, and not the pre-pandemic state as it is today, “the press release said.

Main photo source: UM Warsaw

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