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Polish Finance Minister announced tax reductions

Poland’s Minister of Finance announced on Thursday, May 12, that the government plans to introduce new tax cuts to combat inflation.

In an Interview given to Polish Radio 3, Magdalena Rzeczkowska, Poland’s Minister of Finance, announced that as a latest addition to the government’s anti-inflation shield programme.

“The government is aware that the higher inflation that we are dealing with, means the increased costs of food or energy, which affects the citizens. Hence, we are introducing anti-inflation shields or support for people who have taken loans, which is intended to protect the citizens.” She pointed out that according to her resort’s estimates, the inflation rate was reduced by as much as 1.5 to 2 pp.

An important part of combating the inflation, part of which is blamed by the government on the war in Ukraine precipitated by Russian invasion, is tax reforms. “As a part of the anti-Putin, anti-inflation shield, we are introducing the ‘Low Taxes’ project. This solution will reduce the lowest PIT rate from 17 pct. to 12 pct.” To simplify the tax system, the government will scrap the middle class tax relief, but this should be offset by the new, lower tax rate, which will benefit the majority of the taxpayers. Poland has already massively increased the tax-free allowance (about EUR 6,450 annually) and raised the second tax threshold by nearly doubling it ( to about EUR 25,750) beginning from the start of this fiscal year.

Minister Rzeczkowska said that some of the changes will only be introduced from January 1, 2023, in order to allow time for adjustment of software and computer systems needed to calculate the new taxes.

Other ways in which the government plans to reduce inflation is to encourage the banking sector to offer more attractive interests on long-term investment deposits to encourage people to begin saving money.

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