Polish Government Proposes Middle-Class Tax Cuts Funded by Higher Corporate and Wealthy Levies

Prime Minister Donald Tusk has unveiled a plan to overhaul Poland's income tax system to provide relief for an estimated 3.5 million people in the middle class. The proposal seeks to address bracket creep caused by a 30 percent increase in wages since the current government took office. Under the new plan, the threshold for the lowest 12 percent tax bracket would rise from 120,000 zloty to 130,000 zloty. A new intermediate tax bracket of 24 percent would be introduced for earnings between 130,000 and 150,000 zloty, while the 32 percent rate would apply to earnings above 150,000 zloty.

To fund these cuts, the government proposes increasing the corporate income tax from 19 percent to 22 percent for firms and capital groups with annual revenues exceeding 50 million euros. Additionally, the solidarity levy for individuals earning over 1 million zloty per year would increase from 4 percent to 5 percent. Prime Minister Tusk stated that these measures are intended to make the tax system more equitable.

The proposals come ahead of next year's elections and still require approval from parliament and President Karol Nawrocki. While the ruling coalition holds a majority in parliament, President Nawrocki is aligned with the right wing opposition and has vetoed many bills. Tusk also noted that raising the tax free allowance from 30,000 to 60,000 zloty is not possible due to budgetary constraints and the need to fund defense spending.