Poland scraps fuel duty cut as oil prices fall

Poland’s Prime Minister Donald Tusk has announced the government is ending a reduction in fuel excise duty, with a separate decision on VAT to follow in the coming weeks.

Pixabay LicenseImage by IADE-Michoko from Pixabay

Speaking before Tuesday’s cabinet meeting, Tusk said falling global oil prices, driven in part by expectations surrounding the US-Iran agreement, had made the excise cut unnecessary.

Fuel prices, he said, would remain at the same level as when the duty reduction was in place.

The excise cut was part of a broader government scheme launched in late March, known as the Fuel Prices Lower package, which also included a temporary reduction in VAT on petrol and diesel from 23 percent to 8 percent, as well as a cap on pump prices.

To offset the cost of the programme, the cabinet on Tuesday approved a draft bill which would introduce a windfall tax on fuel companies, at a rate of 60 percent – down from the originally proposed 75 percent.

The finance ministry estimates the levy will raise around PLN 4 billion (EUR 940 million) in total, with 3.8 billion expected this year.

Tusk said the companies would largely end up funding the scheme themselves.

„They won’t lose out, but they won’t profit either,” he added.

The VAT reduction on certain fuels has been extended until the end of June.

The excise cut alone had been costing the state budget an estimated PLN 700 million (EUR 165 million) a month, with the VAT reduction adding a further 900 million (EUR 212 million).

(ał)

Source: PAP

Radio Poland