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500 zloty per child is policy that is distancing us from the West

The programme of the Law and Justice party (PiS) called “Family 500 plus” provides 500 PLN for a second and any subsequent child, as well as for the first child in poorer families. It is supposed to improve the situation of the Polish families. It could be, however, that similar results from the social policy point of view may be achieved a bit more cheaply – wonders Maciej Bitner, Chief Economist at WISE, in “Business for People”.

Under the programme “500 plus” offered by PiS, a family with two children will receive 500 PLN every month. They will also receive 500 PLN for each subsequent child. The benefit for the first child will be provided for families whose income per capita does not exceed 800 PLN (or 1200 PLN in the case of disabled children).

Uneconomical operation

According to Maciej Bitner, medium and long-term benefits will help improve the situation of families. ‘This is an enormous sum. Of course such an amount would improve their situation. A question arises, however, whether similar results from the social policy point of view could be achieved a bit more cheaply? If we multiply the sum of 500 PLN by the number of all children, we will get 25bn PLN. It constitutes almost 2 pct of the Polish GDP’, calculates Bitner.

The guest in “Business for People” believes that this proposal should be addressed to those, who are in a need of support, i.e. those who find it difficult to make ends meet or to provide a good start for their children. ‘Certainly, not everyone has such problems. I would even dare to claim that at least every second person who will receive benefits doesn’t have these problems. Instead, probably the larger number of people would have to pay taxes for this reason and the whole operation will not be profitable for them at all’, he explains.

In his opinion, the income criterion should be taken into consideration, so as the support was provided for those who need it most. ‘It’s not like collecting taxes and transfer operations are completely free of charge. There are transaction costs, as well as social losses connected with the amount of the tax. The less the state transfers the money around, the better. If they insist on doing it, they should make sure that the money goes only to people who need it most’, he repeats.

‘I want to stress that the money had to be taken from somewhere. It would have been spent one way or another Worse still if the people spend most of their benefits and it will reduce our national savings. Poland has a problem of too little savings and low investments. It affects our economic growth and the level of wealth of next generations. An increase in spending will slow down the process of reducing the distance between Poland and the Western countries’, he explains.

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