Tax Exemptions in Light of the Concept of Fairness in Personal Income Taxation in Poland

Abstract

Purpose | The aim of the research is to evaluate tax exemptions in the structure of the personal income tax in Poland from the standpoint of the just taxation idea. The article is an attempt to answer the question: To what extent can the idea of fair tax, taken from the theory of economics and public finance, be implemented in tax legislation, in consideration of the current social, economic and political circumstances? Research method | In order to verify the research hypothesis, a method of descriptive analysis with elements of critical analysis has been utilised, as well as concluding by analogy, based on the literature of the subject, current laws, including the Personal Income Tax Act and the jurisdiction of the Constitutional Tribunal. Results | The undertaken analysis allows for the statement that just taxation, both from the perspective of economic theory and public finance as well as enacting tax law, is a dilemma still on point and controversial, given the necessity of reconciling of both the state’s and taxpayers’ interests, i.e. common welfare and private good. Tax exemptions in the structure of income tax serve in the implementation of the non-fiscal functions of the tax, mainly characterised by redistribution and stimulation. From the point of view of tax fairness, personified strictly by the ideas of equality and universality of taxation, tax exemptions are a departure from that notion, although they are permitted when the lawmaker introducing such priorities, is driven by rational motives, which remain in accordance with the public interest. Originality / value / implications / recommendations | The added value of the article lies in its in-depth analysis of the concept of fair taxation in retrospect, together with its contemporary interpretation in relation to the current regulations governing the personal income taxation in Poland. Despite the fact that most concepts of fair taxation taken from the economic theory and public finance had materialised before the institution of the personal income tax, the matter of fair taxation plays a significant role and in contemporary tax system, considering many civilisational challenges, increase in the included income, wealth and environmental inequalities.