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Poland adds VAT cut on heating to anti-inflation measures – Reuters

WARSAW, Nov 30 (Reuters) – Poland will cut VAT on heating as part of a package of measures to lower inflation, the prime minister said on Tuesday, after a flash estimate from the statistics office showed price growth surging to a fresh two-decade high.

Tight labour markets and strong consumer demand in central and eastern Europe have combined with global factors such as rising fuel prices and supply chain disruptions to stoke inflation.

This poses a headache for Poland’s government, whose electoral success has in part rested on raising the spending power of ordinary Poles with social benefits and increases in the minimum wage.

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« We are lowering VAT on … heating from networks from 23% to 8%, » Mateusz Morawiecki told a news conference, adding that the reduction would be in force for the first three months of 2022.

The measure comes in addition to a package of tax cuts on petrol, gas and electricity and cash payments for households announced on Thursday.

Morawiecki said additional measures could be introduced if inflation stayed high. He said that, according to analysts, the government’s measures could knock 1-1.5 percentage points off inflation.

A flash estimate from the statistics office on Tuesday showed that CPI was 7.7% in November, above analysts’ estimates and at a level not seen since 2000.

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Reporting by Alan Charlish, Pawel Florkiewicz and Anna Koper; Editing by Alex Richardson and Alison Williams

Our Standards: The Thomson Reuters Trust Principles.