Countries located in Central and Eastern Europe region are proposing tax cuts for younger generation to keep them within the country and stop brain drain of skilled workers into Western EU nations. The so called phenomenon referred to as brain drain is likely to reduce economic prospectus of a few CEE nations as youngsters are making use of the block’s freedom to move across to other nations for better job prospects.
This movement of youngsters had urged Poland to completely remove income tax for nearly 2 million youth of the country. The law which was initiated in this month will help retain young Polish citizens said PM Mateusz Morawiecki as the nation had already lost 1.7 million people in last 15 years which he described as a gigantic loss. After this law Polish citizens that earn below $ 22,207 and are below age of 26 years will not have to pay income tax.
As the average salary of young people is around 60,000 zloty, this threshold is pretty high. This trend is now being followed by Croatia too which has proposed scraping of income tax for younger generation below 25 years and will cut it by half for people in age group of 25 to 30 years. The new changes are likely to be presented in the parliament in forthcoming months and will take effect early next year. But experts believe that such measures may not be able to prevent brain drain as it fails to address root cause of this phenomenon.
Tax breaks for younger generation in CEE nations is aimed at reversing tide of shrinking workforce which may have long term effect on economic growth in the area. During 2017 around 17 million residents in EU blocks moved to other nations in the region of which around 32 percent were between age groups of 15 to 34. The most preferred destination for immigrants was Germany and UK while people were moving from Poland, Romania, Portugal and Italy.