Polish tax ministry's 'tax cut' raises concerns over hidden increases

Poland's Ministry of Finance has unveiled a set of tax adjustments that it frames as a reduction, sparking debate among economists and the public. The proposed changes include raising the initial income tax threshold and reclassifying a portion of income currently taxed at 32% into a new 24% bracket. However, critics argue that these measures are deceptive, as they are coupled with a significant increase in the corporate tax rate for large companies, from the current 19% to 24%.

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All taxes are transferable, as demonstrated by banks after the introduction of the so-called 'bank tax' and by Orlen and Lotos after the introduction of the fuel fee.

Economist Robert Gwiazdowski, writing for Rzeczpospolita, suggests the ministry should be called the "Ministry of Taxes" rather than the "Ministry of Finance," implying its primary focus is on taxation rather than broader financial management. He contends that all taxes are ultimately transferable. Gwiazdowski points to historical examples, such as banks passing on the costs of the "bank tax" and Orlen and Lotos shifting the burden of the "fuel fee" onto consumers, as evidence that businesses will likely pass the increased corporate tax burden onto consumers.

The ministry also justifies raising excise taxes on alcoholic beverages, stating the goal is to curb consumption and reduce associated social harms. While acknowledging this as a noble objective, Gwiazdowski questions the consistency of this approach. He notes that disability pensions paid by the Social Insurance Institution (ZUS) for work incapacity due to long-term alcohol abuse are set to increase by over 5% from March 1, 2026, meaning alcoholics will receive nearly 100 PLN more, bringing their total to almost 2,000 PLN.

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The increase in excise rates on all alcoholic beverages is primarily aimed at reducing the consumption of these beverages, and consequently, reducing the negative social consequences associated with their consumption.

Furthermore, Gwiazdowski challenges the ministry's rationale for maintaining lower excise taxes on beer, citing the ministry's claim that it must protect the "tradition of beer consumption as a beverage with flavor qualities, not a source of cheap alcohol." He argues that many mass-produced beers lack flavor and are instead high in alcohol content, sometimes exceeding 17%, which he refers to as "cheap alcohol." The lack of a legal definition for beer in Poland, unlike for vodka and wine, allows producers to market beverages with high alcohol content under the "beer" label, which consumers may accept.

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We must protect the 'tradition of beer consumption as a beverage with flavor qualities, not a source of cheap alcohol.'