Petrol tax U-turn for growth

"We hope this will help prevent economic slowdown and even boost growth in the second half of the year," said Finance Minister Mirosław Gronicki. Excise tax will be cut by zł.0.25 per liter of unleaded gasoline from the current zł.1.57. The duty on diesel fuel will remain at zł.1.1 per liter. A liter of unleaded petrol costs about zł.4.5 while diesel sells for about zł.4 in Poland.

Gronicki estimated the move would cut budget revenues by zł.400 million this year, a fraction of Poland's total annual budget revenues.

The decision marks a turn-around from the Ministry's previous controversial view that excise taxes would be raised to compensate for a budget hole created by a costly VAT rebate passed by parliament last month.

Central bankers and economists have said that surging fuel prices could impede Poland's economic growth, which picked up to 2.8 percent year-on-year in the second quarter from 2.1 percent in the first three months. (Reuters)