The good, the bad and the VAT

While the Polish government works out its position on the VAT rate for construction services and materials, residential developers say that one third of their number won't survive an increase from 7% to 22%. But could a disaster for the primary market prove a blessing for the secondary market? A few weeks ago 40 Polish developers sent a letter to the Prime Minister asking him to change Poland's stance in negotiations with the EU concerning the proposed 22% VAT on the sale of new flats, building materials and construction works. The letter stated that if VAT increases, 30% of construction companies will go bankrupt with the loss of a staggering 400,000 jobs. But while such an increase would undoubtedly be bad news for the primary market, could it actually kickstart Poland's secondary residential market? Prices would almost certainly increase, says Dariusz Witkowski of Polish agency Maxon Nieruchomosci. ,If VAT goes up then the price of new flats will grow too, but not t