A devilish dilemma: higher debt or higher taxes. Populism is alive and well in Poland.
The largest increase in 2026 is expected to be the tax paid by banks, whose corporate income tax rate will soar from 19% to 30%. Excise taxes on alcohol (a 15% increase compared to 2025) and cigarettes will also increase, along with higher sugar and lottery winnings taxes (from 10% to 15%). But the search for additional revenue for the state budget doesn't end there. For example, in 2026, health insurance contributions will be higher, the limit on corporate spending on internal combustion engine cars will be reduced, and the use of the National e-Invoice System ( KSeF ) will be mandatory, which is expected to tighten the tax system and generate additional millions (billions?) for the state budget.
How much money is missing in the state budget?But reality leaves the government no other choice. After seven months of this year, budget revenues reached PLN 313.8 billion, less than half of the 2025 plan. VAT and excise tax revenues are disappointing, as the data doesn't indicate consumers have suddenly tightened their grip on their wallets. Therefore, although budget spending is largely on track, the deficit is already at 54.3% of the target for the entire year.
It's no surprise, then, that news of the state of the state treasury prompted speculation about the possible need to amend this year's budget. However, the Ministry of Finance quickly responded that it wasn't working on it. All that's left is to tighten the screws to improve tax collection efficiency and shift some spending to next year. But only those whose impact won't be felt by voters.
The government is under pressure, because all the praise from the Prime Minister and Finance Minister about the rate at which the Polish economy is growing (and rightly so, as it's a fact and much of Europe envies us) and that in just a few moments we will overtake the world powers and join the G20, the club of the world's 20 richest countries, is perceived by most voters as a message about helicopters bearing money, for everyone and everything.
The pressure is being intensified by the opposition, from the Confederation, through Law and Justice, to the Razem party. They don't seem to care how much debt we have to live on, as long as we spend money left and right. Let others worry about repaying the debt during the next term of the Sejm. Besides, Mateusz Morawiecki's government has already set an example.
President Karol Nawrocki is also weighing in. One of his first legislative initiatives is a proposal to introduce a zero-income tax (PIT) for families with two or more children with an income below PLN 140,000 per person. This idea is both costly to the budget ( PLN 29.1 billion, according to Ministry of Finance estimates ) and misguided, as it will not benefit families that need the most assistance. President Nawrocki's creativity likely won't end there. And considering the demands he put forward during his campaign for the Palace, it could cost us dearly. As we calculated in "Rzeczpospolita," in a pessimistic scenario, it could cost us as much as PLN 125 billion.
Expense list: war, expensive energy, technology raceBut the greatest pressure on the budget comes from those around us. It's hard to expect today—though we all desperately wish it would—that Russia's war with Ukraine will end any day now. We must arm ourselves to prevent Putin from pointing the finger at Poland's soldiers in a few years. We also have little time left to implement the energy transformation; otherwise, Polish businesses, crushed by energy costs, will be unable to compete in global markets. We seriously need to engage in the global technology race; otherwise—if we succeed—we'll join the G20, but only briefly, to say hello.
Of course, we, as a country, can borrow for all of this. There will be those willing to open a credit line with a high limit. As will economists and politicians who will applaud it. But do they themselves live on credit? And will they honestly admit that they are simply populists?
RP
