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    Polish Government Considers Extending Zero VAT Rate on Food

    Estimated reading time: 1 minute

    The Polish government is deliberating the possibility of extending the zero value-added tax (VAT) rate on food products, according to Artur Soboń, the Deputy Minister of Finance. The current policy has already resulted in an estimated 11 billion PLN ($2.9 billion) reduction in the national budget this year alone.

    Soboń emphasized that the zero VAT rate on food has significantly aided Polish citizens, translating into a monthly saving of over 80 PLN ($21) for each family. Given that food constitutes approximately 27% of household expenses, the government acknowledges the potential relief it offers to the population.

    In May, Soboń suggested that there were grounds for extending the zero VAT rate on food not only until the end of 2023 but possibly for a longer period. However, the final decision will be subject to careful consideration and evaluation of its long-term impact on the national budget.

    Inflation and Economic Context

    The National Bank of Poland reports that the market consensus projected a year-on-year inflation rate of 11.1% in June. Notably, the core inflation rate, excluding administered prices, declined to 10.3% in June compared to 12.1% in May. The inflation rate, considering the most volatile prices, decreased to 14.4% in June from 14.9% in May. The core inflation rate, calculated using a 15% trimmed mean, stood at 12.8% in June, down from 13.5% in May.

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