In an effort to slow inflation, the Polish government will temporarily abolish value added tax (VAT) on food and reduce VAT on fuel.
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From 1 February, zero VAT will be paid on food in Poland. VAT on petrol and diesel will fall from 23% to 8%, which should reduce the price of motor fuels by 15 cents per liter. The temporary VAT reduction will apply for six months and is intended to mitigate the impact of high inflation on the financial situation of households, said Prime Minister Mateusz Morawiecki.
Most foods, with the exception of luxury goods, are subject to 5% VAT in Poland, which is reduced to zero for six months. This will burden the budget with 1.54 billion euros, Morawiecki said.
The Polish government is responding by temporarily reducing VAT to a sharp acceleration in inflation. The annual growth rate of consumer prices rose to 8.6% in December.