Anti-inflationary shield. Prime Minister Morawiecki explains the causes of inflation

The Prime Minister of the Republic of Poland, Mateusz Morawiecki, posted an entry on his Facebook about the anti-inflationary shield, in which he explains its causes, effects and government actions.

SEE: FORMER MEMBER OF THE MONETARY POLICY COUNCIL: BEFORE THE SHIELDS WERE NOT NEEDED, BECAUSE THERE WAS NO SUCH INFLATION

“Our anti-inflation shield is to protect Poles against inflation, which has many causes, and its sources are mainly abroad,” the Prime Minister wrote on Facebook. According to the head of government, the main external factors that triggered such inflation are:

  1. Russia -> energy policy; gas blackmail
  2. EU -> green deal; reconstruction fund
  3. COVID-19 -> lockdown; disruption of the supply chain

These factors marked in the graphic have caused rising energy prices and crisiswho caused inflation.

According to the graphics of Prime Minister Mateusz Morawiecki, protection against price increases is to be an anti-inflation shield, which includes:

  • Tax reduction for energy, fuel and VAT;
  • Abolition of excise duty;
  • Sheath additive;
  • Economical administration;
  • reduction of budget expenses.

The anti-inflationary shield with a total value of savings of up to PLN 10 billion consists of: reduction of motor fuel prices – excise duty at the EU minimum level and 0% tax on retail sales of fuel; reductions in gas prices (January-March) – lower VAT (8 percent instead of 23 percent); zero percent electricity excise duties for households; reduction of electricity prices (January-March) – lower VAT (5% instead of 23%); lowering the costs of electricity and basic food products – through the “shield” supplement from PLN 400 to PLN 1150 per year, depending on the household income; savings in administration and budget?

According to the information provided, the dynamics of rising fuel prices is to be reduced as a result of the reduction of the excise duty from 20 December 2021 to 20 May 2022 to the minimum level permitted in the European Union. “Additionally, from January 1 to May 31, 2022, fuels will be exempt from retail sales tax,” it was written.

It is planned to lower the VAT rate on natural gas for gas consumers using tax tools. The reduction in VAT to the level of 8% was indicated. (from the current 23%) for three months – from January to March 2022.

“In addition to special assistance to the most needy, who will receive allowances, we want to jointly and fairly mitigate the negative effects of the increase in electricity prices. They are caused by the gas crisis and the increase in the prices of CO2 emission allowances in the European Emissions Trading System (EU ETOS) system. Therefore, we propose: exemption from excise duty from the current PLN 5 / MWh to PLN 0 / MWh for households; reduction of the excise tax on electricity for other recipients to the EU minimum “- it was written.

VAT reduction on electricity up to 5% it will be valid for three months in the period January-March 2022.

As the presentation shows, the shielding supplement is to compensate for the growing costs of electricity and basic food products. It is introduced due to the EU ban on reducing the VAT rate to 0 percent. The allowance will compensate for VAT on electricity in the amount of approximately PLN 2.1 billion. VAT compensation for food will amount to PLN 1.5 billion for the following product groups: bread – annual VAT of PLN 334 million, cold cuts – PLN 319 million, dairy products (including cheese) – PLN 202 million, milk – PLN 75 million, butter – 55 PLN million, meat – PLN 383 million, eggs – PLN 66 million.

According to the information from the Chancellery of the Prime Minister, the income criterion of households will decide about the possibility of obtaining the cover supplement.

The subsidy in the amount of PLN 400 per year will be directed to single-person households with an income of up to PLN 2,100 per month. A subsidy in the amount of PLN 600 per year will be granted to households of 2-3 persons with an income of up to PLN 1,500 per person per month. The surcharge of PLN 850 will be available to households of 4-5 persons with an income of up to PLN 1,500 per person per month. An annual subsidy of PLN 1,150 will be provided to households of 6 persons and more with an income of up to PLN 1,500 per person per month. – Approx. 5.2 million households will be able to use the allowance. The payment of money will take place in two installments in 2022 – it was written.

According to the Chancellery of the Prime Minister, measures related to savings in administration – increasing the efficiency of public spending – will bring savings of PLN 3 to 5 billion. It has been announced to limit the creation of new, previously unplanned, jobs or offices in public administration in 2022. “Exceptional staffing and financial strengthening will be implemented on a 1-for-1 basis, ie a new job for liquidating another or finding an appropriate financial space within the existing resources” – it was written.

– We will carry out an in-depth review of all public expenditure in terms of its effectiveness in order to introduce additional savings. We will also limit the financing of programs in special-purpose funds to those already implemented or announced, it was declared.


About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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