The end for Polish narrow gauge freight?

Lxd2-266 leaving Stare Bojanowo with a load of coal for Smigiel on 12.03.07. Photo Marek Ciesielski.

We are indebted to Marek Ciesielski who has sent us this stunning photograph of a goods train on the SKPL-operated Smigiel Railway. Sadly scenes like this may soon only exist on photographs because of a Polish law that requires certain railways to pay local land taxes (equivalent to the UK Council Tax) on the land that they occupy.

In many countries railways are exempt from local land taxes. After all who would dream of levying taxes on the land occupied by a road? In Poland most railways are exempt, but freight carrying narrow gauge railways are not. Here is an extract from the relevant statute. Our comments in are in square brackets. Section 1.b of the Law on Local Taxes and Levies exempts land and buildings bought for the purpose of constructing of roads [of course!]. Skip six more sections and in Section 7.1 we read that buildings which form part of railway infrastructure (as defined by the relevant regulations) and the land occupied by them is exempt from local taxes, if:

a) the body responsible for managing the infrastructure is obliged to provide access to licensed railway operators [this exempts PKP standard gauge lines], or

b) are used exclusively for passenger transport, by a railway operator who at the same time manages the infrastructure without providing access to other operators [this exempts WKD, the Warsaw Local railway and SKM, the Fast Municipal Railway in the Gdansk conurbation and purely tourist carrying narrow gauge railways], or

c) are part of railway lines wider than 1.435 mm guage [this exempts the the LHS, the broad gauge line that runs through Poland from the Ukraine to 30 km short of Katowice].

Bizarrely this leaves Poland’s remaining freight carrying narrow gauge lines liable for local tax!

Now, let’s pause for a bit of history. In 2001, the order went out from the senior management of PKP that its remaining narrow gauge railways should be closed. In a few cases railway enthusiasts, or former railway employees, managed to persuade a local authority to take such a line over. Local authorities could take over closed railway lines – free of charge – provided they were used for transport purposes. However, the legalities were often complex and the transfer process dragged out for many years. So the majority of Poland’s remaining ex-PKP narrow gauge railways still belong to PKP! Where the line still operates this is on the basis that PKP grants the local authority a licence to operate the railway and gives an undertaking  that – when the property formalities are completed – legal title the railway land will be transferred.

A few local authorities set up their own municipal companies to run former PKP lines, but most authorities have entered into an operating agreement with an independent operator. In the case of lines where there was an opportunity to carry freight traffic SKPL – who have a freight traffic exchange agreement with PKP Cargo – were invariably chosen. What has this got to do with the problem of local rates? Not very much other than that, until the land transfer is completed, it is PKP and not the railway operator that is liable for payment of local taxes. PKP with its enormous loses has simply ignored these mounting tax liabilities and has waited for the government to bale it out.

Returning to the Smigiel Railway, the land transfer formalities were completed a couple of months ago. The Smigiel Town Council’s lawyers have checked the relevant statutes and have advised the Council that they have to charge SKPL local taxes. SKPL have recently received a notice from the Council that they will be liable to pay taxes and have calculated that the bill could be in the order of 250,000 zł (£50,000). The Smigiel Railway’s operations simply do not earn anywhere near enough to make such payments. A meeting between both sides to try to find a solution has been fixed for early August. SKPL’s management are not sanguine about the results and the Smigiel Railway’s local management have been warned that SKPL may have to withdraw from its role as operator.

As the land transfer process proceeds to completion on other SKPL-operated railways, it could spell the end of narrow gauge freight operations, not only on the Smigiel Railway, but also in Poland as a whole.