The Polish government has announced a significant tax cut to personal income to help Poles tackle the ongoing cost of living crisis.
Polish Prime Minister Mateusz Morawiecki revealed on Thursday the government’s intention to slash personal income tax from 17 to 12 percent, believing the move would “alleviate the consequences of the war in Ukraine at least to a certain extent.
“This is the threshold that includes everyone, the pensioners and those under employment contracts,” Morawiecki said.
In addition, the government’s proposals — dubbed the “Anti-Putin shield” — will introduce the ability for individuals on a flat income tax rate to partially deduct health insurance contributions.
The tax threshold of 120,000 złoty (€25,313) and the tax-free allowance of 30,000 złoty (€6,328) are to remain unchanged, according to the draft legislation presented by the ministry on Thursday.
Morawiecki informed that recently introduced tax relief for the middle class will be removed from the system, as it was criticized by many experts, accountants and ordinary taxpayers alike, for complicating the process of paying taxes unnecessarily.
According to the government’s plan, the Council of Ministers is to deal with the draft of changes, currently being submitted for consultations, in mid-April, and at the end of April, this draft is to be submitted to the Sejm.
If the changes to the tax system are approved, the Polish government will introduce them on July 1, 2022. “We propose a permanent, positive change for all taxpayers, as the fixed budget and tax systems gives us the necessary space to introduce such changes,” said Morawiecki.
The Polish prime minister did however admit the government proposals would see a rise in the country’s budget deficit.
“Due to the negative influence of the conflict in Ukraine, the government is planning changes to the tax system which will leave taxpayers with around 15 billion zlotys more in their pockets. However, the budget deficit could go up by about 0.5 of a percentage point,” he told reporters.
