Poland's opposition lays out spending plan to gain votes

By Wiktor Szary and Pawel Sobczak KATOWICE, Poland (Reuters) - Poland's main opposition party laid out plans on Saturday to sharply increase public spending if it wins October's election, saying it would improve the lives of Poles, accelerate economic growth and yield new tax revenue. The socially conservative alliance led by the Law and Justice (PiS) said that if it gains power, it will also slap new taxes on banks and supermarkets and keep Poland out of the euro zone. It would cut the value-added tax (VAT) rate to 22 percent from 23 percent and reduce taxes on small and medium-sized businesses, the backbone of the Polish economy, to 15 percent from 19 percent, provided the firm employed at least 3 people on full-time work contracts. The latest opinion poll gives 38 percent to the PiS-led alliance, enough to rule alone, and 27 percent to the ruling pro-business and pro-EU Civic Platform. Beata Szydlo, the party's candidate for prime minister, said new spending on policies such as lowering the retirement age and raising child benefits would cost 39 billion zlotys ($10 billion) annually, or 2.3 percent of GDP. "Our starting point is the assumption that the more money stays in the pockets of Poles, the better for the citizens, for the economy, for the budget," Szydlo said at a party convention. "This is not a cost, this is an investment." Szydlo said that tightening up tax collection and curbing the transfer of corporate profits abroad would yield 52 billion zlotys ($14 billion) and 4 billion zlotys ($1 billion) per year, respectively. A planned bank tax should yield another 5 billion zlotys per year in new revenue, while a new tax on Poland's supermarkets, most of which are foreign-owned, would yield 3 billion zlotys annually, Szydlo said. The party's expert on taxes, Konrad Raczkowski, said the planned tax on large retail chains would be a progressive turnover tax amounting to between 0.5 and 2 percent. PLAN Szydlo said Poland should stay out of the euro zone in the foreseeable future and needed to reduce the share of foreign ownership in the banking sector, now at about 60 percent. She said the policies would boost annual tax revenue by 73 billion zlotys, or 4.2 percent of GDP, annually. After the extra spending, the remaining 34 billion zlotys or 1.9 percent of GDP would enable "a budget without deficit" and could be partly spent on development investment, a flyer distributed during the PiS convention said. ING Bank Slaski's chief economist, Rafal Benecki, called the plan to tighten tax collection wishful thinking. "Every finance minister during the last 10 years was trying to do this. None of them succeeded," Benecki said. Political uncertainty has weighed on the zloty currency, hurt prices of Polish government bonds and led to sharp losses in bank shares since opposition candidate Andrzej Duda won the presidential election in May. Poland's economy has grown by over 20 percent since 2007, but wage growth has lagged, leaving many Poles disappointed. The average wage in Poland is still about a quarter of that in Germany. "We must make it so that everyone starts benefiting from economic growth, and not just 10 percent of society, as is the case now," Szydlo said. (Reporting by Wiktor Szary and Pawel Sobczak; Writing by Marcin Goettig; Editing by Kevin Liffey/Ruth Pitchford)