Shield 1.2 (Shield for local governments)

Very soon another amendment to the act on special support measures due to the COVID-19 pandemic will be subject to legislative works. The latest regulations under the Anti-crisis shield concern the majority of local governments. The proposed changes are to help local governments fight the pandemic, e.g. thanks to the temporary easing of the fiscal policy stance. It should be noted that the costs currently incurred by local governments include increased expense on healthcare, taking care of the elderly and lonely people, support for businesses and disinfection. It should be taken into account that the revenue of local governments have been strongly affected by the pandemic, mainly as a result of the decrease in own revenue, PIT and CIT revenues, sale of tickets, rent and property tax. It is estimated that the budgets will be reduced by PLN 13,5 bn, that is about 10% of their projected amount. Changes proposed in the amendment should help local governments survive despite extremely unfavourable circumstances. The most interesting propositions include:

• the government’s approval of the imbalance in the local governments’ current budget due to additional planned deficit in revenue being a result of COVID-19;
• easing in 2020 the fiscal rule limiting the debt to the amount of actual deficit in the unit’s tax revenue resulting from the COVID-19 pandemic;
• a possibility to transfer in 2020 the instalments for the educational, countervailing, balancing and regional portion of the general subsidy earlier;
• a possibility to carry forward to the following months the payment of contributions to the state budget made by local government units generating above-the-average tax revenue;
• redirecting the "corkage fee", i.e. money paid for licences for selling alcohol, to cover the expenses on duties related to the pandemic, including preventing, counteracting and combating COVID-19 and resulting states of emergency”.

To sum up, the local governments will be allowed to breach the currently binding rules regarding budgets and to benefit from a number of exemptions. The final version of the Shield 1.2 will also include solutions under the social programme “Apartment for the Young”.

Should you have any questions or need for support, we invite you to contact our expert, Sebastian GOSCHORSKI:

Sebastian GOSCHORSKI
Business Development Partner at RSM Poland
Head of China Desk at RSM Poland
e-mail: ekspert@rsmpoland.pl
tel. +48 61 8515 766
fax +48 61 8515 786