June 27, 2019 / 2:19 PM / 5 months ago

Child benefits and tax breaks as Polish government gears up for election

WARSAW (Reuters) - Poland’s governing Law and Justice Party (PiS) will extend its child benefit programme from Monday, in a move critics say is a clear attempt to buy national election votes that will also divert much-needed investment from public services.

FILE PHOTO: Poland's Law and Justice (PiS) leader Jaroslaw Kaczynski and Poland's Prime Minister Mateusz Morawiecki applaud as they attend a Law and Justice (PiS) party convention ahead of the EU election, in Krakow, Poland May 19, 2019. REUTERS/Kacper Pempel -/File Photo

All Poles will be able to start applying for a 500 zloty-a-month (£105) payment for first-born children - a benefit hitherto reserved for poorer families - and the money will arrive on their accounts by the end of October, probably just in time for the autumn ballot.

The PiS, which denies the benefit is an electioneering ploy, announced it and others in February under a programme to increase public spending by up to $10 billion (£7.9 billion) a year.

The party is on course to win the election, which is scheduled for either October or November, but opinion polls suggest it is not certain to get an absolute parliamentary majority.

“We asked PiS to enlarge the (child benefit) programme ... already in 2015, but they didn’t listen to our arguments,” said Jan Grabiec, lawmaker and spokesman for the opposition Civic Platform.

“Today PiS is making the change as it fits in the electoral calendar and it is aimed at gaining votes.”

Also included in the PiS spending programme is a large increase in the tax-free allowance for those under 26, a demographic corresponding closely to the group with the lowest proportion of PiS voters. The government ratified that on Tuesday.

Until now, most families have received the 500 zloty credit only from the second child onwards. Social services will have up to four months from July 1 to start paying the extended benefit.

According to sociologist at SWPS University, Agnieszka Kwiatkowska, that delay turns it into a political marketing tool.

“Voters already know that they can submit applications from July 1, but they will get the money just before the election. This... looks like a continuation of election propaganda,” she said.

The government also gave a one-off 1,100 zlotys to all pensioners in May, just before European parliamentary elections.

PiS politicians say the payments are simply investments in future generations and Polish families.

“This has nothing to do with the election campaign, because we understand democracy this way that the money earned by Polish taxpayers is to be returned to Polish families,” said PiS lawmaker Janusz Szewczak.

Some voters are unconvinced.

“I will take the (three months of benefits of) 1,500 zlotys, but I won’t vote for them,”, said Marta Kowalczyk, a graphic designer and mother of four-year old Zosia.

“It will be paid out just before the election. This will work with some people and they will vote for PiS.”

EDUCATION, HEALTHCARE FREEZE

The labour ministry estimated the cost of the whole spending programme at 31 billion zlotys in 2019, rising to 41 billion in 2020.

Economists say the programme would be expanded at the cost of a larger budget deficit - the finance ministry sees that rising to 1.7% of GDP this year from 0.4% last

FILE PHOTO: Poland's Prime Minister Mateusz Morawiecki speaks during a news conference about 500 zloty-a-month child benefit programme in front of the Prime Minister Chancellery in Warsaw, Poland June 24, 2019. Agencja Gazeta/Slawomir Kaminski/via REUTERS

- but also entail a spending freeze on education, healthcare and the modernisation of polluting energy plants.

While the programme will probably increase consumption and limit a potential slowdown in growth, analysts say it is not warranted at a time when the Polish economy is growing at well above 4%.

“Of course it is a programme related to the election cycle. It does indeed fit well with the situation in the global economy... (but) at the moment the Polish economy does not need this kind of support,” said Marcin Luzinski, economist at Santander Bank Polska.

Reporting by Anna Wlodarczak-Semczuk and Marcin Goclowski; editing by John Stonestreet

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