Polish Government Considers Extending Zero VAT Rate on Food

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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.

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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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