Distributional effect of tax and benefit reforms introduced from 2006-2011 (PL)

A series of tax and benefit reforms directly affecting household incomes have been introduced in Poland in the years 2006-2011. Taking advantage of the microsimulation model SIMPL we demonstrate that the entire package of reforms increased household incomes by from 1.7% to 2.2% of the GDP depending on the assumed incidence of reductions of employers’ social security contributions. With legislated incidence of SSCs incomes of 8.2% of households grew by more than 10%. Assigning entire reductions in employers’ SSCs to employees, incomes of as many as 16.7% of households grow by at least 10% as a result of the changes. At the same time however, about 8% of households experienced falling incomes, mainly as a result of freezing of the nominal parameter values of the tax and benefit system. We demonstrate that the proportional gains over the period have been distributed fairly equally by decile groups. The package of reforms introduced from 2006-2011 increased the value of the Gini coefficient by 0,46 percentage points.