Civilising the state-entrepreneur relationship
For many years, we functioned in Poland in the economic sphere between two paradigms – liberalism and statism. Today, we know that it was a false dilemma – says Jadwiga EMILEWICZ
Developed countries have shown that their largest companies built their competitiveness owing to the subtle state aid. In the face of the crisis, the free market is not so good a thing because there are businesses “too big to let them fall.”
In our region, a non-reflective version of the liberal narrative has been in use since the early 1990s. For the average Kowalski, this means that he buys worse-quality and more expensive products than the average Schmidt or Jones do. Another result was a complete detachment of economic policy from social policy.
With the deepening gap between the poor and the rich, the world has long realized that the economic debate is unavoidable. in Poland, we have come to the similar conclusion only recently.
Clear guidelines as to the economic policy to be followed by the government are already written into law. The Article 20 of the Constitution of the Republic of Poland states that the basis for the country’s economic system shall be “a social market economy, based on freedom of economic activity, private ownership, and solidarity, dialogue and cooperation between social partners”. In practice, however, finding a balance between state interventionism and freedom of the private sector proves challenging. The state should support rather than replace, motivate rather than set requirements, and certainly not decree. Instead, it should provide the tools and outline the goal to be achieved. That is my idea of a responsible state.
And we are consistently pursuing such a model, being, in essence, a socially and territorially balanced development, based on solidarity, inclusion and subsidiarity, sustainable economic growth, both using resources available and searching for new areas of investment.
One of the very important elements of a responsible economic policy is the so-called Constitution for Business – a package of five laws that redefines the state-entrepreneur relationship. The entrepreneur is no longer treated as a client or a petitioner but becomes a partner. The public administration must remember that profits made by businesses are the crucial component of the state budget since it is based on taxes.
The new order is guaranteed through the fundamental freedoms laid out in the Law on Entrepreneurs. These are the principle of equality, which ensures that everyone can undertake, exercise and cease the economic activity on equal terms; on equal terms; the principle of liberty, which states that anything that is not prohibited by law is allowed; the presumption of honesty, which has a public authority assume that the entrepreneur acts lawfully, honestly and with respect for good manners; finally, the lenity rule, which requires a public authority to assume that factual doubts which could not be dispelled in the course of the proceedings should be resolved to the benefit of the entrepreneur.
It is worth mentioning some of the issues that are being civilized for the benefit of entrepreneurs under the Constitution for Business. First of all, a small-scale business i.e., making a monthly profit below PLN 1,050, will not be considered an economic activity. Previously, one who gave private lessons, earning a few hundred zlotys a month, or occasionally sold their produce at the market without being a registered entrepreneur, would be in breach of the law. Now, they can operate a non-registered activity as long as their monthly income is lower than PLN 1,050, which represents 50 percent of the minimum monthly wage. It is enough for such a person to keep a record of transactions in the ordinary notebook because they are not subject to fiscal audit.
First of all, the maximum simplified rules of operation (e.g., in terms of keeping records of sales) and the exemption from the obligation of paying social security contributions or registering will make a small trade and casual services move out of the gray area to the benefit of entrepreneurs and consumers alike.
The second example of the real impact of the Constitution for Business is the relief to starters: natural persons starting a business will not be obliged to pay social security contributions for a period of 6 months. This is an optional instrument that will provide fresh entrepreneurs with the necessary capital, which is most needed during the start-up phase.
Thirdly, entrepreneurs will finally have their advocate with the public administration whose mission will be to intervene where entrepreneurs’ rights have been breached. The SMEs Spokesperson will also provide assistance in organizing mediation between entrepreneurs and administrative bodies.
Fourthly, excessive and unjustified tax audits will be curbed. The Constitution for Business introduces the obligation of conducting the so-called risk analysis before initiating the audit. This will allow to determine if there is a real risk of infringement as opposed to launching scrutiny at random. We have also introduced a ban on review on cases that had already been investigated by the same body earlier.
The Constitution for Business straightens the relationship between the state and the entrepreneur, disturbed during the years of transformation. I am convinced that it creates a climate of mutual trust, something without which it is difficult to imagine stable growth. Today, we have exceptional conditions for implementation of the plan presented by Eugeniusz Kwiatkowski in December 1938, then interrupted by the outbreak of World War II. Economic growth draws upon the growth of entrepreneurship. It is for the sake of entrepreneurship that we enacted the Constitution for Business and that we are now working to amend the Public Procurement Law. “We want and we must overtake other nations and countries”, to quote Kwiatkowski, and entrepreneurs are the driving force in this race today.