Witold Modzelewski during the hearing before the VAT investigation committeePhoto: PAP / Bartłomiej Zborowski
In the Sejm the first hearing was held for the VAT investigation committee. The witness invited to the committee is Prof. Witold Modzelewski, expert, tax advisor, former Deputy Minister of Finance and author of the first VAT Act.
The chairman of the committee, Marcin Horała (PiS), asked whether the extent of the irregularities investigated with regard to VAT fraud in the years 2007-2015 was exceptionally high according to the witness. Modzelewski admitted that "in the period covered by the commission, the magnitude of the difference, known as the tax gap, has grown considerably, it is beyond question." He added that both independent experts and interested experts estimate this.
– If we examine what a loss is, because this loss is objective and we count these losses in hundreds of billions of zloty's in this period in which we speak – he said. He added: "the extent of the problem is alarming."
Professor Modzelewski said, among others, about counting the tax gap. – We used – I am talking about my humble person and the experts that I represent – a fairly simple rule, that is, a comparison of the dynamics of nominal incomes and speed, ie the share of income in GDP. They are rather uncomfortable methods and reasonably clear and transparent. What happened in this period, that is to say not only a very rapid increase in the (…) tax gap, but especially a decline in income, (…) in relation to GDP – said Modzelewski.
In his opinion, this decline was unfounded, not only income in relation to GDP, but also a nominal decrease. – It was in 2009. The design of the government budget assumed revenue from VAT, actual budget revenue at PLN 119 billion, then the budget was changed and the implementation amounted to PLN 99 billion. The difference of PLN 20 billion is very large – Modzelewski said.
– Of course it was explained that at that moment there was a crisis and that the crisis was only about VAT, not about the economy. This is a very interesting way of reasoning. GDP did not decline, but fiscal revenue declined. I ask myself why? But of course the crisis was not decisive here, but what happened at the time with this tax – explained the expert.
– At that time these pathological phenomena grew, making us poorer, as a collective, as our homeland, with several hundred billions of zloty – said Modzelewski.
In his opinion, this problem is indisputable and it is only necessary to explain why this happened. – If I can help a high commission on this issue, I will try to do it, Professor Modzelewski.
The Commission disagreed at the request of PO Zbigniew Konwiński, who asked the National Election Commission to issue documents in the form of invoices and contracts issued by Law and Law in 2010-2017 by Witold Modzelewski and his office on opinions of experts, analyzes and bills. Modzelewski referred during the testimony to Konwiński's conclusion that "these are not secrets".
Former Deputy Minister of Finance
Professor Modzelewski is one of the co-makers of the tax system in force in Poland. In 1992-1996 he was Deputy Minister of Finance. Professor Modzelewski has long argued that tax regimes that are unfavorable to the state and that have led to massive VAT fraud are not the result of ignorance or inefficiency, but of bad will.
He also believes that "the law was created so that it would become a source of income for someone". He also recalls that the VAT Act, which seeks to avoid tax and enforce refunds, is the responsibility of the Minister of Finance. In his opinion, instruments can be introduced in 2004 to prevent abuse.
Reaction to the analysis
The vice-chairman of the commission, Kazimierz Smoliński, of Law and Justice for the meeting, indicated that the professor repeatedly sent several tax analyzes to the authorities, so the committee will want to know what they have received with the reaction. PiS politician expects that the witness will also share knowledge about the VAT law.
According to Mirosław Pampuch of Nowoczesna, however, the examination of witnesses is too early at the current stage of the committee's work because it has not yet been received by the documents it has requested. That is why, in his opinion, it will be difficult to ask him questions, all the more that he has not participated in the work of the government, which is being examined by the committee. Mr. Dziedzna has announced that he will ask the professor about the definition of the Vat gap.
Investigate negligence and negligence
The VAT Committee was established in July. The aim is to investigate the problem of tax collection over time of the PO-PSL coalition government. The information from the Ministry of Finance shows that the VAT gap in the years 2007-2015 was at least PLN 250 billion.
In accordance with the resolution of the Sejm on the establishment of a committee, the work deals in particular with actions, negligence and negligence, including members of the government, "in particular the minister responsible for budget, public finances and financial institutions, and government officials subordinate to them. " The President of the Supreme Court and subordinate civil servants, the public prosecutor's office and the bodies appointed to prosecute crimes, "in particular the head of the Internal Security Agency, the head of the Central Anti-Corruption Agency and the Chief Commandant of the Police and the government officials who are subordinate to them "are also indicated.