Tax cuts: Polish government introduces ‘anti-inflation shield’

The newly announced anti-inflation shield will introduce a series of tax cuts to soften the effects of rising inflation

editor: Grzegorz Adamczyk

Prime Minister Mateusz Morawiecki announced the main features of a new economic program on Thursday meant to counteract and soften the impact of rising inflation.

He explained that there were a few reasons for the growth of inflation, not only in Poland but also throughout Europe. Among these reasons he listed are the prices of Russian gas and the increase of gas prices to match CO2 emissions.

The PM pointed out that inflation is at the highest it has been in 28 years, not just in Poland, but said with reassurance that the Polish government is doing everything in its power to help Poles survive the situation.

He announced that tax on fuel will be lowered to the minimum allowed by the European Union for five months, starting on December 20, 2021.

Value-added tax (VAT) on gas will be cut from 23 percent to 8 percent from January to March. VAT on electricity in the first three months of 2022 will fall to 5 percent from 23 percent. There will also be no excise duty on electricity for households.

Additionally, households will receive financial support in the form of means-tested payments of PLN 400 (EUR 86) to PLN 1150 (EUR 246) which will be made in two installments in 2022.

Morawiecki also noted that the rapid inflation growth was also a result of the pandemic and the economic aid packages which influenced the inflation rate, as well as the fact that economies are finally exiting the pandemic.

“We faced a dilemma of whether to permit unemployment to grow from 1.5 to 2 million or to protect workplaces. We decided to protect workplaces, which is why we injected EUR 43 billion into the economy,” he said.

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