Karol Nawrocki was officially sworn in as the president of Poland on Wednesday morning. During the election campaign, he announced several tax legislative initiatives, namely three changes to the personal income tax (PIT).
He talked about a tax exemption for families with at least two children; an increase in the tax threshold from the current PLN 120,000 to PLN 140,000; an increase in the tax-free amount in the personal income tax (PIT) from the current PLN 30,000 to PLN 60,000; and greater access to the family tax credit to entrepreneurs on both the flat-rate and lump-sum PIT (currently, this credit is available to entrepreneurs filing tax returns on a scale).
Nawrocki also spoke about lowering the VAT rate from 23 percent to 22 percent.
However, implementing these promises will prove challenging, writes Polska Business Insider.
What problems will there be in implementing President Karol Nawrocki’s announcements?
First and foremost, the wealthiest Poles, those with incomes exceeding PLN 120,000 ($32,000) per year, would benefit from the new president’s proposals.
“Exempting parents raising at least two children from personal income tax (PIT) on incomes up to PLN 140,000 per year would mean significant tax benefits for the highest earners — up to PLN 35,200 per year per person. For two high-earning parents, this could translate into savings of up to PLN 5,800 per month,” Małgorzata Samborska, tax advisor and partner at Grant Thornton, previously told us.
The lower the earnings, the smaller the benefits. People earning less than PLN 30,000 per year would gain nothing.
Secondly, the president failed to indicate the sources of financing for his tax proposals. According to expert calculations (CenEA), the total costs of Karol Nawrocki’s proposed income tax solutions amount to PLN 19.1 billion annually, of which PLN 15.9 billion are the costs of tax exemptions for families with two or more children and expanding access to family tax relief.
While the president spoke during his campaign about increasing VAT revenues (tightening the VAT gap), tax experts admit this is essentially unattainable. The government even recently boasted that the so-called VAT gap had fallen from 13.5 percent (in 2023) to 6.9 percent (in 2024). It’s not as if this gap can be reduced to zero.
Moreover, with the current defense spending, Prime Minister Donald Tusk also says that there is no room for even an increase in the tax-free amount, and this was one of the flagship ideas of the Civic Coalition from the 2023 campaign.
Will President Karol Nawrocki reach an agreement with Donald Tusk’s government?
Although the president has the legislative initiative, the Sejm and Senate pass bills. This means that without the support of the government and the current parliamentary majority, there is no chance of implementing Karol Nawrocki’s announcements.
Of course, it cannot be ruled out that, despite his announcements and declared reluctance, the new president and the government will reach an agreement on tax changes.
