Polish President Proposes Massive Tax Cuts Amid Budget Concerns

Poland’s new president, Karol Nawrocki, is set to introduce an ambitious tax relief package that could cost the state up to €29.4 billion annually. The initiative, dubbed the “tax armor,” includes several sweeping changes such as reducing the VAT rate from 23% to 22%, eliminating income tax for families with at least two children, raising the threshold for the higher income tax bracket, and scrapping the capital gains tax (Belka tax) for lower-income levels.
Nawrocki also supports doubling the tax-free allowance from 30,000 to 60,000 złoty, aligning with a popular campaign promise. These measures aim to ease the financial burden on Polish families and stimulate economic activity.
However, government officials have raised red flags over the feasibility of the proposals, citing the country’s growing fiscal deficit and rising public debt. Poland’s central budget deficit is projected to reach a record €68 billion this year, fueled in part by substantial defense expenditures. The national debt is also approaching the constitutional cap of 60% of GDP, raising further concerns about the long-term sustainability of such tax cuts.
Despite the warnings, Nawrocki plans to move forward with his proposals. His first bill, expected to be submitted to parliament soon, will likely focus on either the VAT reduction or the zero income tax for families with two or more children.