One of the key demands of Donald Tusk’s team before the elections was to increase the tax-free amount to PLN 60,000. zloty. This is a promise that was to be fulfilled in the first 100 days of coalition rule. On Tuesday, Donald Tusk said that in the current situation we cannot afford it. He argued that his government was not giving up on the free quota project, but added that it was unable to implement it this year “for budgetary reasons.” He used a huge sum of money, “which we must spend primarily (…) not only on military purchases, but also on broadly understood security related to the threat of war.”
Was the promise to increase the tax-free allowance just an election trick?
The cost of increasing the tax-free allowance, estimated at approximately PLN 50 billion per year, has been known for a long time. Donald Tusk was aware of this when he made this promise before the elections. Therefore, it should come as no surprise that this financial challenge is difficult for the government. Moreover, the geopolitical situation and the threat of war have not changed significantly in recent months. The war in Ukraine continues, and due to the threats, Poland has been planning increasingly higher defense spending for a long time. Economists from the Civic Platform could therefore easily calculate how defense spending correlates with the new tax free amount. Therefore, attempts to create a different narrative today than before the elections seem unconvincing.
The questioning of this election promise had already taken place earlier. At the beginning of the year, one of the representatives of the government admitted that the change should not be introduced in the tax year so as not to surprise taxpayers. However, the long-standing tax practice – supported by the ruling of the Constitutional Tribunal – is that changes beneficial to taxpayers may be introduced during the tax year. Deputy Minister of Finance Jarosław Neneman also argued that such a change would be a complicated systemic operation that would require time. It is worth noting, however, that the increase in the tax-free amount already took place in 2022, so it is not a completely new concept.