Poland is one of few countries in Europe which did not experience recession during the financial and fiscal crisis. In 2014, growth has accelerated, to 3.3%. Government expenditures are at the average EU level, exceeding 42% of GDP. Continuous high fiscal deficits increased the medium size public debt to 51% of GDP, but it was put on a sustainable path through implementation of fiscal consolidation with measures both on the public revenues and on the expenditure side. Successful implementation of the program led to Poland’s exit from the Excessive Deficit Procedure of the EU in 2015, one year in advance than previously envisaged. Income tax is progressive, with the lower rate of 18% and the higher one of 32%, applied above the threshold of approximately 160% of GDP per capita. VAT
level is set at 23%, with privileged rates of 5% and 0% for some products. Total payroll tax wedge reaches OECD average of 36% mostly due to high social insurance contributions, which are divided between those paid by the employer and those by the employee. High social security contributions have led to high share of non-fixed temporary working contracts (‘’junk contracts’’) among the working population, because of the lower social-contributions scheme having had been applied. Although thorough privatization process took place in 1990s, the government is still in possession of many enterprises in various sectors, including the biggest bank in the country PBK BP, although that one is listed in stock exchange with private minority shareholders. Some of those companies do not operate efficiently, receiving direct funding from the state for their operation, especially in the mining sector, although the overall level of subsidies is low, at 0.6% of GDP. The plan for privatizations of state owned enterprises has been downsized since last year, with a number of companies excluded from the program. Emphasis was put on the inclusion of minority shareholders via stock exchange public offering.