Poland unveils tax cuts to curb rampant inflation

WARSAW: Polish Prime Minister Mateusz Morawiecki unveiled tax cuts for petrol and energy on Thursday, as well as subsidies to the neediest households in a bid to curb rampant inflation.

Morawiecki said he hoped the measures would “cushion the effects of inflation” particularly “during the most difficult winter months” when the government expects inflation to peak.

The government will reduce the value-added tax on gas for homes from 23 per cent to eight per cent for three months, as well as drop VAT to 5 per cent for electricity over the same period.

The excise duty and VAT will also be temporarily suspended for petrol and there will be social welfare payments to around five million households to make up for the sharp increases in food prices.

Inflation in Poland last month was 6.8 per cent on an annual comparison, the highest rate in more than 20 years.

The current forecast of Poland’s NBP central bank pegs annual inflation at 4.9 per cent this year, rising to 5.8 per cent in 2022 and inching down to 3.6 per cent the following year.

The Polish currency, the zloty, fell to its lowest level in 12 years against the euro on Monday, in part due to concerns about Poland’s political conflict with the EU, analysts said.

Morawiecki said the total cost of the “anti-inflation shield” would be around 10 billion zloty (2.1 billion euros, $2.4 billion).

He also said he would call for changes to the EU’s Emissions Trading System (ETS), the world’s biggest carbon market, where Poland says financial speculation is driving up prices.