Do we have high taxes in Poland?

Recently, a lot is heard about some additional fees that our government in Poland wants to introduce. This, combined with a discussion among my friends about, among others, income tax threshold, prompted me to check how high the tax burden for employees in Poland and Europe is. I have included everything in one Excel and I hope that you will help me improve it.
I have chosen arbitrarily a few countries from Europe: the Czech Republic, Germany, Sweden and the UK. These are the countries, to which many people migrate and often seen as countries with a higher standard of living, as compared to Poland.

The methodology of the analysis is quite simple. I analyze the tax burden and how much you can afford on 5 levels of earnings: half the average salary, eight tenths, average salary, double and five times the average. I have also added a level of B2B software development for the future. It gives an image on the cross-section of society. After collecting information about the average salary, I look up the total employer’s cost and net salary using various online calculators (all sources are in the file). Later I see what the prices are and measure the standard of living.

In the fields M6: Q11, I have collected salaries at various levels. I took them from public sources, search engines, etc. In the grouped panel, the prices of various products are available. Those were downloaded from the In the L column there are the weights of each product used in calculating the shopping basket. These weights were chosen by Numbeo, and the entire methodology described here. In column G are my weights and if you want to calculate your basket I leave this option open. The spreadsheet is downloaded automatically, so it’s always up-to-date. I explained how to download tables from here.

Two next segments show the total cost of the employer and net salary. As I mentioned, I used available calculators, which are listed in M2: Q4. I purposely use local currencies because I want to assess the standard of living in a given country, not how much money can be sent back to Poland.

In M84: Q89 , the total tax burden of each group is calculated. Conditional formatting is done with lines and allows you to evaluate how the burden looks in different countries for the same group.

For most groups, the burden in Germany is the highest, and in the UK the lowest. The situation in the UK results from a very high income tax threshold. Taxes for the richest in Sweden are gigantic because they pay up to 60% of the total salary. Taxes in the Czech Republic are simply average. However, in Poland they are … interesting. Taxes for the poorest are higher only in Germany. The richest in comparison to other countries have the lowest burden. Typically for our country, the “middle class” is most heavily burdened. This results from the fact that your social insurance caps at a a certain level, and despite the higher tax threshold (32%), your overall burden is smaller.

The last element of the analysis is to check how much a given group can afford in a given country. The listing is in M92: Q97 cells. To calculate them, I divide the net salary by the shopping basket. This allows me to compare, how many baskets a given group can buy in a given country for simplicity I will refer to it as a standard of living. Formatting is also done with lines. Below I also add a formatting version for all fields.

My conclusions:
1. In Poland and the Czech Republic all social groups can afford less than in other European countries. For example, a person earning an average salary in Poland can buy 40% of a shopping cart, which is exactly the same as a person earning half the average salary in Germany.

2. Despite the very low burden in the UK, the standard of living is lower than countries with higher taxes. Nevertheless, it is still significantly higher than in Poland and the Czech Republic. And the richest in the UK have a lower standard of living than their colleagues from Sweden with 60% tax.

3. Poles have a similar level of living to the Czechs. The richest in Poland can afford more than in the Czech Republic.

4. The income inequality in Poland is the largest among the countries analyzed. Earning 5 averages has a 9.23 times higher standard of living (you can buy 9.23 times more shopping basket) than earning half the national average. In Germany, this index is 7.94 and in Sweden 6.46.

Dividing the standard of living in Poland and other countries I can assess how much better is to live there. The data shows that the poorest can afford almost twice as much in Germany and Sweden. The richest in Germany can afford 63% more, and in the UK only 14% more than in Poland. And here I see the potential risk of using one shopping basket for all groups. People earning 84 thousand pounds per year will certainly have more e.g. investment opportunities than Poles with an annual salary of 288 thousand. PLN. Maybe you should experiment with the scales to find another better basket.

That’s it. I encourage you to download the file and your own analysis. If you add another country, I’d like to add it to the article and analysis.

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