Poland to increase tax on alcohol and cigarettes

Warsaw, Poland – The Polish government has backed a plan to increase the tax on alcohol, cigarettes and other tobacco products.

According to the Polish news agency PAP, the government approved on Thursday a plan to increase the tax on alcohol, tobacco and cigarettes by 10%, and has sent the text for approval to the lower house of Parliament, dominated by the ruling Law and Justice (PiS) party.

According to government estimates, the tax hike on alcohol and tobacco should bring in an additional €400 million (1.7 billion zloty) to the state budget next year.

“We are surprised by the scope of the new increase”, commented Witold Wlodarczyk, head of the Polish Spirits Industry (ZPPPS), arguing that they hadn’t been consulted on the issue.

In order to take effect on January 1 as planned, the bill has to be approved by both houses of Parliament and signed into law by President Andrzej Duda.

In September, the Polish government approved a balanced and deficit-free budget for 2020, the country’s first since the fall of communism thirty years ago, despite hefty social spending by the ruling PiS since it first rose to power in 2015. The preliminary draft budget, based on an expected GDP growth of 3.7% next year, is “overly optimistic” but still feasible, according to analysts. In 2018, Poland finished the year with a deficit of some €2.4 billion.

Poles rank among the heaviest drinkers in Europe, with around 10 litres of pure alcohol per capita consumed every year, according to the OECD.

With its new alcohol tax, Poland would follow the path of neighbouring Czech Republic, which also passed, last May, a tax increase on tobacco-products, spirits and gambling activities.