Since Feb. 1, 2022, Poland’s previous government implemented a zero VAT rate on essential food products to combat the effects of high inflation, which stood at 9.2 percent year-over-year in January 2022.
Now, under the new left-wing government, that tax is being implemented once again.
The Polish Finance Ministry justified the reinstatement of the 5 percent VAT rate by pointing to a significant decrease in inflation, with recent data from Statistics Poland (GUS) showing a slowdown to 3.9 percent in January of this year. The ministry expects inflation and food price increases to continue their downward trend in the coming months, according to Polish news outlet Niezalezna.
Former Prime Minister Mateusz Morawiecki criticized the decision on social media, lambasting the government led by Donald Tusk for eliminating the zero VAT rate on food, a move he argues will further strain Polish citizens’ budgets. Morawiecki highlighted that the zero VAT rate, introduced by the Law and Justice (PiS) government, was highly praised for mitigating the high impact of inflation, particularly benefiting the country’s poorest.
Morawiecki also warned of upcoming challenges, including higher electricity and heating prices expected to hit citizens hard in the autumn and winter, as well as increased contributions for entrepreneurs, contrary to the current ruling coalition’s previous promises.
He pointed out that the first opportunity to evaluate the government’s actions would be at the local elections scheduled for April 7.
Economists predict that the removal of the VAT reduction will lead to higher prices for products previously covered by the zero rate, such as meat, fish, dairy products, eggs, vegetables, fruits, fats, ice cream and water.
As Remix News previously reported, although VAT is being reinstated for food products, which account for a significant share of Poles’ overall spending, the VAT on beauty services is being reduced. Notably, this industry lobbied the current government before the election for this change in the tax structure.
