Scratching beneath the surface

18 October 2018, three days before the local election. The councillors of Warsaw unanimously pass a 98% discount on payments for conversion of perpetual usufruct into ownership.

A word of explanation for those unfamiliar with an odd concept of użytkowanie wieczyste (which have been taught to translate as perpetual usufruct) which traces back to 1945 when large areas of land were nationalised to facilitate post-war reconstruction of Polish cities from ruins, but in fact also to deprive private owners of their wealth. In this lame form of land lease the central or a local government is the owner of lands and leases them (for 99 years) to its users who own buildings erected thereon. The Polish government has decided to bring this preposterous legal formula to an end. With the beginning of 2019 the perpetual usufruct is transformed automatically into regular land ownership (leave off now several aspects of the mess caused by yet another law enacted in haste), however the current land lessees will have to pay for the conversion for 20 years. For lands owned by the central government, a discount scheme has been passed, allowing land lessees to benefit from 60% discount if they settle the conversion charge in 2019. Discount schemes pertaining to lands held by local governments have been left at their discretion.

I had thought the resolution passed on 18 October would remain a pre-election move, especially since I had been misinformed the 98% discount would apply to conversions finalised before the end of 2018. Just recently I checked the resolution had been referring to the new law on perpetual usufruct transformation (in effect since 1 January 2019). So no wonder when the newly elected councillors tried to back down on the resolution, uproar was inevitable. The new mayor of Warsaw, Mr Trzaskowski gave in quickly and on 20 December 2018 the 98% discount was reinstated during an additional city council session.

I plead to be positively affected by the resolution, as it will save me more than PLN 10,000 on the conversion charge applicable to my share in plot of land belonging to my flat and garage. Despite personal one-off benefits I strive to see further than the end of my nose. By voting for a much larger discount, Warsaw has deprived itself of stream of income, money which is necessary to develop Warsaw and make it an even more inhabitant-friendly capital. Actually with a scheme under which a regular payment for 2019 is 5% of the entire conversion charge, while if the discount is applied, it declines to 2%, it makes no sense not to pay for 20 years in advance.

The form of giving up on income and giving out money does not take my fancy. Although I opt for a lean government, some expenditures need to be borne by it and I am aware lower proceeds translate into higher deficit and higher taxes in the future. Why should I and other owners of properties built on lands owned by city of Warsaw be better off than those whose buildings are erected on state treasury’s lands or those who are full land-owners? The selective gift s a manifestation of populism, something I disapprove of!

On the other hand, reinstatement of 98% discount was a call to PiS government bring down the discounts applicable to lands owned by the state treasury. Politics-wise this was a shrewd move. Few people realise it, but the intention of PiS was not to get rid of pesky perpetual usufruct, but to garner loads of money from the conversion charge (anyone with a bit of money would make use of 60% discount which anyway means inflows to the government budget 8 times higher than annual land lease payment) to buy off voters. Now, PiS is in a fix since whatever it does, it will be worse off. Either it loses voters convinced for a little while by the opposition who outpaced PiS in throwing about money, or it loses a broad stream of money to be spent before the parliamentary election. The opposition in turn, has lost its credibility, as their electorate do not expect them to race against PiS in terms of throwing the government budget out of balance, but to lift Poland from the mess PiS has plungedit into.

But now, let’s enjoy three days of rest from politics and other nasty stuff. May the atmosphere be friendly and remember to take exercise. Long walks should be due instead of sitting by tables or staring at TV!