The Polish government has followed and other European partners and approved a historic tax cut of up to 4,500 million euros to deal with inflation and the recovery’s loss of traction. The Polish Prime Minister, Mateusz Morawiecki, has announced a plan that includes subsidies to households to deal with the rise in fuel and energy prices, as well as reductions in VAT, which is also eliminated on food.
The provisions, according to the Polish Government, contemplate the elimination of VAT on food and fertilizers -currently taxed at 5% tax- as of February 1 and for the following six months. These tax reductions will make the State collect “between 3,500 and 4,500 million euros less, but it is worth it because this will have a great positive impact on the people”, stresses Prime Minister Morawiecki. “Only non-staple foods, such as seafood, will be left out of this price reduction,” he specifies by way of example.
The Consumer Agency will verify that merchants and manufacturers apply the VAT reduction to the final prices of their products. Poland has dubbed this plan the Inflation Shield 2.0. The tax package also provides for the reduction of VAT on gasoline from 23% to 8%, which will translate into a reduction of about 12 cents per liter of fuel.
On the other hand, the cost of energy for private homes will benefit from a 5% reduction in the case of electricity. The Government will enable a fund of some 2,200 million euros that will be distributed among households with less income to compensate for the rise in gas prices.
In the case of public buildings, premises of non-profit organizations and churches, a special reduced rate will be applied to the gas bill. Likewise, the Polish Government’s plan establishes that the state Strategic Reserves Agency will be able to use funds from the country’s Public Treasury to acquire and maintain gas and other energy sources of strategic value for Poland.
The Polish Minister of Climate and Environment, Anna Moskwa, affirms that the package of measures will benefit about 7 million families who will save, on average, about 22 euros per month, that energy subsidies per household can reach 300 euros in some cases .
Year-on-year inflation reached 8.6% in December, after suffering an increase during the last semester
According to official data, year-on-year inflation reached 8.6% in December, after suffering a continuous increase during the last six months. Poland thus follows the line set by other countries such as Germany or France. The German Finance Minister, the liberal Christian Lindner, has promised tax cuts of more than 30,000 million euros in this legislature, while calling on the rest of the ministers to austerity and reduce spending on policies that will not have a clear return for society or the economy. “In this legislature we will reduce the burden on people and small and medium-sized enterprises by notably more than 30,000 million euros,” he assures, adding that if the 2022 budget is still marked by the previous government, its draft for 2023 ” will contain rebates.
For its part, France is in the process of reducing its corporate income tax rate. The process of this tax reduction will conclude in the year 2022. As part of this scheduled reduction, France reduced its combined rate of Corporate Tax – including a surcharge – from 32.02 percent in 2020 to 28.41 percent in 2021.
In addition, Greece has also introduced rebates. It reduced the Corporate Income Tax rate from 24% in 2020 to 22% in 2021, expanded its R&D tax subsidies and slightly reduced its maximum statutory personal income tax rate.
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