Parliamentary the draft amendment to the act on tax on goods and services is an element of the so-called anti-inflationary shield 2.0, announced by the government. According to its provisions, from February to the end of July 2022, VAT on food and drinks currently covered by the 5% rate is to drop to zero. With 23 percent up to 8 percent the rate of this tax is to drop on motor fuels: diesel oil, biocomponents constituting intrinsic fuels, gasoline, LPG gas.
How will VAT rates change?
For fertilizers, plant protection chemicals, garden soil and other means supporting agricultural production, VAT is to be reduced from 8%. to zero. VAT on gas is to drop from 8 percent. to zero, for thermal energy from 8 percent. to 5%, and in the case of electricity, the reduced VAT rate of 5% will be maintained.
According to the draft, the reduction of the VAT rate to zero is to cover such food products as meat and fish and their products, dairy products, vegetables and fruit and their products, cereals, products of the milling industry, cereal preparations and bakery products. Until now, all of them were taxed at a rate of 5 percent. There is a plan to reduce VAT to zero for some drinks, e.g. containing at least 20 percent. fruit or vegetable juice, milk drinks and the so-called plant milks.
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In the case of means used for agricultural production, VAT reduction from 8%. to zero, it will cover fertilizers, plant protection products, horticultural soil, products supporting agricultural production such as: agents improving soil properties, growth stimulants and growing media.
The total decrease in state budget revenues was estimated at approx. PLN 11.6 billion, of which the reduction of VAT on food and beverages is to translate into a decrease by about PLN 2.92 billion, in the case of fuels it will amount to about PLN 3.11 billion, a decrease in VAT for fertilizers is a negative effect on the budget at the level of 0.52 PLN billion, gas – approx. PLN 2.09 billion, electricity – approx. PLN 2.30 billion, and heat – approx. PLN 0.67 billion.
During the works in the Public Finance Committee, technical amendments were submitted to the project and accepted by the committee. In addition, amendments were submitted, which the KFP did not support – their authors announced in this case the so-called minority requests. It is about extending the period of application of reduced VAT rates until the end of this year, as well as lowering the VAT rate for people who use liquefied gas for heating purposes and deleting the provisions on the obligation for sellers to post information on reduced VAT rates.
During the second reading, the opposition tabled nine amendments to the draft, concerning, inter alia, extending the validity period of the regulations until the end of 2023, permanently introducing a greater reduction in excise duty, lowering the fuel surcharge or eliminating the emission charge. All these proposals were negatively assessed by the government representative. Most members of the Public Finance Committee also expressed a negative opinion on them at the Thursday meeting.
– The solutions included in the project are beneficial to the whole society, therefore, their entry into force as soon as possible is beneficial and does not violate the principles of a democratic state ruled by law. The draft in question is related to the existing very difficult economic situation, having a negative impact on the living conditions of the society, hence the often non-standard solutions it contains are of a temporary and exceptional nature – said the deputy rapporteur Adam Gawęda from PiS on Thursday.
In turn, according to Krystyna Sibińska from KO, “the act is late and underdeveloped”. The deputy said that three amendments to the content of the draft proposed by the KO “were treated as unnecessary”, although they contain, inter alia, postulates submitted by the Polish Liquefied Gas Organization. The KO deputy pointed out that the draft reduces the tax on autogas, and no tax on LPG for heating purposes. It also objected to the proposed regulations that would require sellers to inform about tax cuts. What are you doing this for? It won’t make anyone better – she said.
Whereas in the opinion of Tomasz Trela from the Left, the validity period of the provisions proposed in the draft should be extended. – You have to make decisions so that citizens do not receive shock therapy after the end of the regulations – he said. According to the deputy, although the bill was submitted as a deputy, its author is “Prime Minister Morawiecki and the Chancellery of the Prime Minister, and they should come out here and explain why the regulations apply until July”. Also, in the opinion of Jarosław Rzepa from the Polish Coalition, the proposed provisions should apply longer. “
Inflation is not letting go, the shield will only help a little
According to the deputy president of the NBP, Marta Kightley, the anti-inflation shield will temporarily reduce inflation by even 3.4 percentage points. percentage points, and in annual terms, inflation this year should be lower by about 1.2 percentage points. percent
Despite government shields, it will still be a year of high inflation. – Average annual inflation rates may exceed 6 percent, maybe even oscillate around 7 percent, maybe even more – said Prime Minister Mateusz Morawiecki on Tuesday.