The Sly Santa Claus Report 2023

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Children believe in Santa Claus, then find out that no such person exists and that their parents bought presents under the Christmas tree. However, The Sly Santa Claus soon takes Santa’s place. Government. In 2023, he distributed gifts worth 4,750 zlotys per head to Poles. The cleverness of the Clever Santa is that these gifts will be paid for by the recipients themselves.

(see report)

The only things certain in life are death, taxes, and the fact that the government will use the money taken from you to bribe you. Or at least try to buy your votes for another social benefit, subsidy, or material gift. Unfortunately, you bear the cost of these gifts – in taxes. Did you know that? Well, unfortunately, some adult Poles are still not aware of it. We want to change that.

The Warsaw Enterprise Institute has been monitoring what kind of new gifts taxpayers receive from the government’s The Sly Santa Claus in a given year since 2020. The goal is to increase taxpayers’ awareness of how economic policy and public finances work. However, we hope our report will also give food for thought to those in power who believe they have invented an effective way to secure election votes. This is because most of the 15 gifts we identified in 2023 had an electoral purpose.

Among the electoral gifts are laptops for elementary school fourth graders and laptop vouchers for teachers. The teachers who can count on a coupon are about 270,000 plus their household members. In a political calculation, this means potentially half a million more votes. One also can’t help but mention subsidies for modernizing fire stations, which went to where voter turnout was highest. The political calculation of the former Law and Justice government was explicit: fire stations are in the countryside, and the countryside is our natural voters, who simply need to be mobilized. The fact that the 13th and 14th pensions are also electoral goes without saying. An expression of concern for retirees would be a reform of the pension system, not the yearly priming of its inefficiencies with emergency benefits covered by working people.

Of all the expenditures we found to be gifts, only support for people with disabilities and a one-time allowance of PLN 2,000 for social workers working with families (the “Family Assistant in 2023” program) clearly “defend” themselves. It is significant, however, that the benefits that make the most sense are the least generous. This is because the groups endowed with them are relatively small and, therefore, have low electoral value.

The Polish working taxpayer will pay about PLN 4750 for 2023 gifts. This is an increase of more than PLN 1,300 compared to 2022, but the result is still well below the record year of 2020, then, the expenses amounted to PLN 6795 per taxpayer. However, let’s remember that 2020 is a time of pandemic and exceptional chaos in public policies. Everyone then somehow lost their minds for what we are paying today, not only health-wise (neglected treatment of chronic diseases) but also financially – as a result of inflation. The mistakes made in the pandemic were not entirely “culpable” but resulted from an all-encompassing panic that turned off rational judgment.

 

The Sly Santa Claus “generous” again

Per-election spending is an entirely different story. They result from the cynical belief of the political class that society can be corrupted with its own money. Scientific studies indicate that “buying voters’ votes with their own money” actually works. Still, to a limited extent – it does not work when the competing parties are level-pegging. On the other hand, the more voter groups a given government has to cater to – and, as time goes on, these groups increase – the more difficult it is to achieve the desired effect due to ( after all!) budget constraints. Moreover, while the endowed group may vote for a given party, the disregarded group may be discouraged. Therefore, the net effect of vote buying is not precise and predictable in advance. As 2023 proves, giving away public money only sometimes works how politicians want it to. More was handed out, and elections were not won.

The new government led by Prime Minister Donald Tusk not only announced that “nothing given will be taken away,” but also announced new gifts. Teachers are to get a raise (by 30 percent from January 1, 2024), as well as the entire budget staff (20 percent), and young mothers, provided they return to work quickly after giving birth, will receive PLN 1,500 a month (the so-called “grandmother’s allowance”). In addition, the 500+ benefit will be indexed to 800+.

WEI has also begun to examine spending at the local government level in 2023. Here, too, there is a high level of spending flippancy. In our “Black Book of Public Spending” (DOWNLOAD free PDF), we described 49 examples of mostly local government unnecessary and absurd expenditures with a total value of more than PLN 12 billion. You can still vote for the most absurd one (VOTE).

Here it is worth recalling Milton Friedman’s famous classification, in which he distinguished 4 ways of spending money. We can spend:

Spending your own money on yourself – this is the fairest and most effective way.

Own money for someone else’s needs – this is still a fair, but less effective way. We can, for example, ” fail” t choose a gift according to the taste of the recipient.

Someone else’s money for your own needs – you do this by paying for breakfast out of your employer’s budget, or as a minister, using the company car to do your shopping. This is an inefficient way from the money owner’s point of view. Your employers rather lose out on it.

Other people’s money for other people’s needs – this is the essence of how a redistributive state works. Despite the best intentions, neither politicians nor officials can guess what we really want. This is the most inefficient way to spend money.

The incredible generosity of The Sly Santa Claus in 2023 and the fact that he is unlikely to stop being generous in the coming years fits well with the general attitude of the Polish political class toward public funds. Politicians are not very concerned about whether tax money will be spent sensibly, whether there will be a return, and how it will affect the overall health of the state’s finances. The election period has intensified this tendency. Not surprisingly, the public finance sector deficit at the end of 2023 is projected by PKO BP to be 5.5%, which would be one of the worst results in the EU.

 

Our calculations are a certain approximation, not a precise estimate. Hence, this publication makes no claim to scientific accuracy, and its central message is to make fellow citizens aware that free lunches do not exist and that they are the ones who pay for them. Against all appearances, this knowledge is limited. A 2017 survey was conducted for the website ciekaweliczby.pl found that less than 40 percent of Poles know that the source of funding for programs such as 500+ is the taxes they pay, and not just, for example, their neighbors or supporters of other parties.

Unfortunately, the Polish government does not keep a list of all the introduced social benefits and programs, subsidies and grants. Therefore, identifying state activities that can be described as gifts to the taxpayer or some specific group of beneficiaries paid for by taxpayers is done through tedious research.

In our list, we calculate the cost per taxpayer of gifts received from the state in a given year. We estimate the value of individual contributions based on calculations presented in the impact assessment, credible press, and analytical publications and on our calculations. We write only about new skills from the government distributed in a given year. We only include those programs that the government launched in previous years that are still in force if they have been expanded in scope or value. Thus, we consider, for example, the cost of increasing the minimum wage, if this is indexed above inflation, the value of additional pensions, or various “emergency” subsidies.

Regarding the numerator of our calculations, i.e., the budget cost of a given gift, first, some of the money spent depends on the utilization rate (not all those eligible will use them, or not all will use them immediately), which results in delays in accessing information on final spending. For our exercise, we assume that the utilization rate equals 100 percent. Secondly, some expenditures considered, although they begin during the ongoing year, are spread over successive years. They have predetermined budgets, but these budgets may change in the future. We follow these assumptions if these expenditures have annual budgets, considering the amounts allocated for the current year. Third, some gifts formally function as investments, such as in infrastructure. In that case, we believe the total cost. We acknowledge that we claim arbitrariness in assessing whether an expense is an investment or a gift.

As for the denominator of the calculation, the matter is more straightforward. Namely, we assume all budget expenditures are financed from taxpayers’ pockets. We take the number of working people from CSO data for Q3 2023. – It amounts to 16873000 people.

(see report)

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