Nightmare from the past

A new definition of \\\'social housing\\\' should exempt nearly all of the Polish housing market from the devastating effects of a huge tax hikeThe current rate of VAT stands at 7 pct, but under European law this should increase to 22 pct at the beginning of 2008. As house prices in Polish cities are rising at a rate of around 15 pct anyway, the double whammy of a further 15 pct increase could have a devastating impact on the market. Snowball effectAndrzej Halicki, the director of the board office of PZFD (the Polish Union of Developers), describes the potential fall-out from such a change in the tax on properties: "A 30 pct increase could lead to a collapse in the market. Credit taken out would have to be bigger, people could then have problems paying mortgages or taking out loans, so people could stop buying houses." According to Mr Halicki, this situation would firstly affect the smaller firms, who would not be able to operate if the finance for such projects is removed -