Higher Tax-Free Allowance Delayed. Government's Key Pledge Turns into Political Bargaining Chip
The Ministry of Finance has confirmed that raising the tax-free allowance to PLN 60,000 – a flagship promise of the Civic Coalition – won’t be fulfilled anytime soon. Experts say that even with President Karol Nawrocki's support, the reform is likely years away due to its high cost and budget constraints.
“This promise looks good on paper and at rallies, but was never economically realistic,” Maciej Hadas, tax advisor at Grant Thornton, said.
The reform would cost PLN 55.9 billion, a burden the government deems unacceptable amid efforts to reduce the deficit below 3 percent of GDP.
President Nawrocki has hinted he may submit his bill if the government stalls, potentially forcing the ruling coalition into a political corner. Rejecting such a proposal could damage the government’s credibility.
Meanwhile, advisors argue the change would benefit low-income earners and stimulate consumption. However, the lost PIT revenue would heavily impact local governments. Without clear compensation, municipalities risk losing billions.
Experts warn the government faces a difficult choice: raise taxes, cut spending, or increase borrowing – all politically risky. For now, the promise of a higher tax-free allowance remains more a political slogan than a real policy shift.
(XYZ)
