Polish Tax Cheats Face Loss of Passport, ‘Prize of Liberty’

WARSAW —  A ghost of the Communist past is haunting Anna Bankowska, head of Poland’s behemoth social security system.

With her overburdened state-run agency nearly $2 billion in the hole, Bankowska says it is time to get tough with employers who are chronic social security tax cheats.

But Bankowska is learning that her weapon of choice--the passport--has become so revered in post-Communist Poland that it will be difficult to prevent tax evaders from traveling abroad, as her disputed crackdown threatens.

“It is a dangerous idea to use the passport as a way to control people,” said businessman Jan Parys, a former Polish defense minister. “The passport is a symbol of our transformation. After 50 years of totalitarianism, it is the prize of our liberty.”

Over the past several weeks, at Bankowska’s direction, representatives from social security offices have been meeting with passport agency officials to consider ways to link regional passport approvals and social security records.

Under Bankowska’s plan, employers who fall six months behind in payments to the Polish Social Insurance Agency, known as ZUS, will lose their passports if it is also determined that their traveling abroad would render payment unlikely.

The idea arose when ZUS officials determined that many of the worst offenders were out of the country.

“My job is to do whatever I can do to collect debts, and that means using all possible instruments allowed by law,” said Jadwiga Pawlowska, who works for Bankowska in collections. “I simply hope that those persons who don’t pay, but are able to pay, will be so scared that they come forward.”

Many countries, including the United States, impose passport restrictions as leverage to collect various debts.

The method is allowed under the 1991 Polish passport law, and it has already been used to pressure delinquent fathers in alimony cases.

But the ZUS campaign has run into trouble--even among passport officials essential to its success--because it is seen as perpetuating excesses and injustices from Communist days, when passports were issued arbitrarily by the state militia, applicants had to provide character references from employers and connections were key.

“There are other ways to collect these debts, through the fiscal office and courts,” said Ryszard Hincza of the Interior Ministry, which oversees passports. “Taking away a passport should be an absolutely last resort. This is not the world in which we used to live.”

Polish employers are responsible for paying social security taxes for their workers, but the whopping 48% fee has led to rampant cheating. The money is distributed by the bloated social security agency for retirement and disability pensions, public health care--even state-subsidized funerals.

Although Bankowska’s crackdown applies to both private and state-run companies, it will probably single out small, private employers because it is too difficult to make a convincing case against managers at huge state enterprises.

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The focus on private companies, business owners complain, is particularly unsettling since state enterprises are the biggest offenders, accounting for three-quarters of overdue payments. With so many of the Communist-era dinosaurs near financial ruin, Polish governments have subsidized ZUS rather than lean on the firms to keep up with payments.

Leszek Balcerowicz, head of the main opposition party and architect of Poland’s economic transformation, said the passport policy is a failed effort to treat the symptoms--rather than remove the cause--of one of Poland’s most pressing problems: its overextended and unsustainable social security system.

“Poland still needs some key reforms to be completed,” he said. “Until then, we will continue to see mistakes like this one.”