Poland - Politics, government, and taxation

Since the change to the political system in 1989, Poland has been governed by alternating periods of right and left-oriented governments. Tadeusz Mazowiecki became prime minister in September 1989, leading the country's first democratic government since the end of World War II. In January 2001, a minority government took power, led by Election Action Solidarity (EAS), an umbrella organization of right-wing parties and the Solidarity trade unions. Despite several changes of government since 1989, democratic, free market, and pro-Western policies have remained unchanged. The large number of political parties established around 1990 has been reduced to 4 major players. The EAS, the moderate Freedom Union (FU), the Polish Peasant Party PPP), and the Liberal-Democratic Alliance, or SLD. From 1997 until late 2000, the SLD, a conglomerate of left wing and social democratic parties, formed a coalition government with the PPP, supporting private ownership, democratic principles in political life, and freedom of expression.

The executive branch of Polish government consists of the prime minister, the cabinet, and the president of the Republic of Poland. The president signs all bills passed by parliament, participates in formulating the annual government budget, and is the commander-in-chief of the armed forces. The president serves a 5-year term and can only be elected to 2 terms of office. Presidential appointees represent the office in numerous government agencies, including the Council of Monetary Policy, an autonomous body that sets targets for the money supply and for interest rates on loans made by the central bank to commercial banks, and establishes guidelines for foreign exchange rates . The former Solidarity leader and Nobel Peace Prize laureate, Lech Walesa, was the first president of post-Soviet Poland.

Poland's parliament consists of a lower and an upper chamber (the Sejm and the Senate) which, together, form the National Assembly. There are 460 members of parliament in the Sejm and 100 in the Senate, all of whom are elected to serve a 4-year term. Candidates for the Senate must be at least 25 years old. The voting age is 18.

The third branch of government is the judiciary, which consists of the courts of law and a number of specially constituted bodies such as the Constitutional Tribunal. The Tribunal monitors and rules on matters alleged to be unconstitutional, protects the rights of individuals, and interprets the laws passed by the National Assembly with respect to rights defined by the Constitution. Labor disputes between employee and employer are heard by the Main Administrative Court, which was established exclusively to deal with non-criminal labor issues and deliver speedy judicial decisions. Cases considered in these courts cannot be considered in other courts.

The Criminal Code and the Civilian Code regulate the conduct of individuals and companies. The European-style legal system is strongly rooted in rules and regulations established by the National Assembly. Poland has abolished the death penalty and the longest prison sentence is 25 years, with life sentences an option only for crimes of particular gravity. However, because of public anxiety over crime, new laws were passed in 2000 approving stiffer penalties in a number of instances. The Civilian Code regulates contractual agreements and presides over divorce cases. It assigns parental custody and sets alimony payments, which are mandatory for all children up to age 18 and for those aged 18 and over who are still enrolled full-time at school. The amount of alimony is based on parental earnings.

In recent years, the Polish government has undertaken several major reforms needed to ensure both economic growth and efficient government administration. Such reforms include redrawing the boundaries of administrative districts, reducing the country's 50 provinces to 16, and the reintroduction of counties. Executive powers have been delegated from the central government to the provinces where elected legislative bodies have been established, thus reducing the number of government departments. This administrative streamlining has coincided with education reform, placing responsibility for the school system in the hands of local authorities. The Polish school system consists of grade, middle, and high schools. Important reforms in health care and social security have decreased government involvement in the provision of medical services and brought in the privatization of pension funds.

Taxes are the major source of government revenue in Poland. Businesses pay a tax of 28 percent on profits, while individuals are taxed on earned income calculated in bands of 19, 30, or 40 percent. Personal income tax accounted for 20.5 percent of all tax revenues in 1999. Over the past several years, tax rates have changed several times. Despite strong pressure from business-oriented leaders, including Leszek Balcerowicz who implemented the economic "shock therapy" of the early 1990s, the rates have not been lowered for some time. Parliamentary debate on this vital economic issue is expected to continue for some time. Excise taxes , representing 22.4 percent of all tax revenue, are collected on tobacco, alcohol, and lottery winnings, while a value-added tax (VAT), introduced some years ago in line with EU countries, supplies 43.3 percent of total tax revenue. The VAT is set at different rates for differing commodities.

The legislative and executive branches of government influence the economy through fiscal and monetary policies. The annual government budget is formulated by discussion of proposals put forward by the prime minister and the president, with additional policies introduced by legislators. Once approved, the budget sets short-term goals related to estimated income and expenditure and the project budgetary deficit or surplus. The economy is managed in line with these projections and, if the deficit figure is exceeded, the shortfall must be covered either through additional public borrowing or increased revenues. However, additional borrowing must have parliamentary approval, not always easily obtained, while additional taxation is limited by public opposition to increases. Consequently, the government may resort to raising excise taxes on selected goods such as alcohol, but more often obtains extra revenue by reducing or liquidating its ownership of companies owned by the Treasury. The privatization of such assets is implemented by opening the companies to bids from all interested parties. The selling off of state-owned enterprises to private companies is fiscally prudent, strengthening the private sector and reducing the necessity for government to compete directly in the financial markets.

The last Soviet troops left in 1994 and Poland, which had actively pursued membership in the North Atlantic Treaty Organization (NATO) since the restoration of democracy, became an official member in March 1999 and joined the NATO peacekeeping forces in Kosovo shortly afterwards.