Poland prepares to significantly lower fuel prices after signing a new law

Fuel prices for gasoline and diesel in Poland may significantly decrease in the coming days. This became possible after President Karol Nawrocki signed the law on taxation of extraordinary profits of fuel companies.

According to Rzeczpospolita, the law has already been published in the Polish official gazette. According to the estimate of Finance and Economy Minister Andrzej Domański, after the tax changes come into effect, fuel at Polish gas stations may become cheaper by about 1.2-1.3 zloty per liter.

For actual price reduction, the Ministry of Finance must separately reduce VAT and excise on fuel by decrees. According to government spokesman Adam Szłapka, the necessary documents have already been prepared, and officials are to begin processing them on October 2. The government expects that new prices may appear at gas stations as early as the weekend.

According to fuel market forecasts, before the tax reduction, A-95 gasoline in Poland cost about 7.97-8.09 zloty per liter, and diesel 8.99-9.29 zloty. If the government's announced price reduction is fully implemented, A-95 may drop below 7 zloty per liter, and diesel below 8 zloty.

Funding for the tax reductions is planned through a new windfall tax - a tax on extraordinary profits of fuel sector companies. For producers, the rate will be 60% of extraordinary profits, and for sellers of imported fuel who do not engage in production - 50%. Only the part of profit exceeding the base margin established by law will be taxed.

It is expected that the new levy will bring several billion zloty to the Polish budget. The largest share of the tax burden will fall on Orlen - the largest fuel company in the country. According to preliminary government estimates, its share in the tax base may be about 60%.

This is the second attempt by the Polish authorities to introduce such a tax. The previous version of the law was sent by the president to the Constitutional Tribunal for review in July due to doubts about possible retroactive application of norms. After that, the government prepared a new draft of the document. Earlier it was reported that the Sejm re-approved the tax on extraordinary profits of fuel companies.

The introduction of the mechanism is related to high energy prices after the escalation in the Middle East. The Polish government already stated during the preparation of the draft law that revenues from the tax should be used to protect consumers and businesses from sudden fuel price increases.

Based on materials: Rzeczpospolita, Polish government, Kurs Ukrainy