Polish government further delays promised doubling of tax-free income allowance

It will not be possible to double the annual tax-free income allowance to 60,000 zloty (€13,929), which Prime Minister Donald Tusk had previously promised to do this year, until 2026 at the earliest, the finance minister has admitted.

He says “there is no room” in the budget for the measure before then because Poland has increased its defence spending amid the war in neighbouring Ukraine.

Introducing the tax-free allowance was one of the 100 policies that, before last year’s elections, Tusk promised to introduce within his first 100 days if he came to power. That deadline expired last week with only around 12 of the promises having been fulfilled.

Previously, the government has argued that it was unable to introduce the allowance in 2024 because the previous ruling Law and Justice (PiS) party delayed the handover of power until mid-December, by which time it was too late to introduce major tax changes for the following year.

However, now finance minister Andrzej Domański has admitted that it will be impossible to introduce the measure in 2025 either and even the possibility of doing so in 2026 “will have to be carefully calculated”. But he pledged that it would happen by the end of the current parliamentary term in 2027.

“In my opinion, at the moment, there is no room for the tax-free amount to increase to PLN 60,000 next year,” he told Polsat News. As a reason for the delay, Domański pointed to Poland’s increased defence spending amid the war in neighbouring Ukraine.

“We are in a near-war situation. We have rapidly increasing defence spending. In 2024, we will spend more than 4% of our GDP on defence…The scale of incoming defence spending is really high,” said the minister.

After Russia’s full-scale invasion of Ukraine, the former PiS government increased Poland’s defence budget to 3% of GDP in 2022 and then almost 4% in 2023, which is the highest relative level in NATO. Tusk’s new government has pledged to maintain that elevated spending.

The journalist interviewing Domański for Polsat News noted that the need for high military spending was already known before the parliamentary elections in October, when Tusk had made his promises.

“Yes, we were aware,” Domanski admitted. “But also, some things are gradually coming to our attention. The scale of these incoming defence expenses is really high.”

However, PiS, now the main opposition party, has accused Tusk of making promises during the election campaign that he knew he could not or would not keep.

“Democracy is a relationship in which one’s word matters a great deal, one’s promises matter a great deal,” said PiS chairman Jarosław Kaczyński during a campaign event on Saturday ahead of upcoming local elections.

“Because if one makes promises with ill will, knowing that what is promised is not feasible, or at any rate is not feasible in the short term, then democracy essentially loses its meaning,” he added.

Last week, PiS submitted eight bills designed to fulfil some of Tusk’s unmet election promises, including a proposal to raise the tax-free allowance to 60,000 zloty. The head of PiS’s parliamentary caucus, Mariusz Błaszczak, called for them to be fast tracked.

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Main image credit: MF (under CC BY-NC-ND 3.0 PL)

Alicja Ptak

Alicja Ptak is senior editor at Notes from Poland and a multimedia journalist. She previously worked for Reuters.