Higher funeral allowance. Finance minister talks about taxes

A dozen or so weeks ago, a draft bill amending the act on pensions and annuities from the Social Insurance Fund and certain other acts was submitted for consultation. Among other things, it provides for an increase in the funeral allowance from the current PLN 4,000 to PLN 7,000.

This benefit was last increased in 2011.

How much does it cost to organize a funeral?

Funeral costs can vary significantly depending on the region – usually in the range of PLN 8-10 thousand.

As we read in the impact assessment, the most expensive are in Warsaw, Wrocław and Kraków (approx. PLN 10,400). The lowest rates, when it comes to large cities, are in Rzeszów, Gdańsk and Poznań. To this must be added fees related to reserving a place in the cemetery and organizing a religious ceremony.

“The proposed funeral allowance amount, despite being increased by 75 percent, may still not cover funeral costs, especially in large cities. However, as indicated above, this does not contradict the purpose of the funeral allowance, which is to provide for a certain degree of funeral-related expenses,” assesses the bill’s initiator, the Ministry of Family, Labor and Social Policy.

The bill also provides for a mechanism for increasing the funeral allowance – using the general inflation rate.

The amount of the funeral allowance is increased every year in March – by the general inflation rate published by the President of the Central Statistical Office for the previous year.

Funeral allowance. Ministry of Finance is against it

The Ministry of Finance points out that such a move will not remain without impact on the budget.

According to the MF, the proposed changes increase the level of fixed expenditures of the government and local government sector. This may in turn negatively affect the “flexibility of fiscal policy and create tensions during the construction of the state budget.”

The Ministry of Finance emphasizes that the estimated cost of the project is approximately PLN 25 billion over 10 years. The main source of financing for tasks resulting from the draft act will be the Social Insurance Fund, indicating the surplus in the pension fund. The ministry warns that in order to finance the increase, taxes or contributions will have to be raised.