The Polish government has announced that it will dramatically cut VAT on petrol from next month to combat inflation and the rising cost of living.
The VAT rate will be cut from 23% to 8%, with other taxes on gas, petrol and electricity being slashed as energy costs rise faster than they have in two decades.
“This is another action…to help Polish families and Polish entrepreneurs in everyday life,” Polish Prime Minister Mateusz Morawiecki said this week.
“After all, the price of fuel translates into the vast majority of prices.”
Morawiecki also hinted at a potential plan to cut VAT on basic food items.
The news comes as Europe’s energy prices continue to spiral out of control, with the crisis set to get worse as the winter progresses.
Gas prices surge again in Europe, leaving some business owners 'terrified' for the future https://t.co/UN0sJC49B2
— CNBC (@CNBC) January 5, 2022
According to the Wallstreet Journal, in some parts of Europe home-heating and energy prices are up 300% since the previous winter.
The news comes as countries across Europe move to shut down fully-functional power plants with a goal of meeting green energy targets.
Germany to close nuclear reactors despite energy crisis https://t.co/NuOTKBhAhZ
— MSN (@MSN) December 31, 2021
In particular, Ireland moving to shut down gas-fired energy plants has caused energy shortages much sooner than anticipated. According to the IDA:
“It was anticipated that it would be about 2026 when there would be a ‘sizable tightness in the electricity market’, but, being six years out, there still would be reasonable time to take necessary action to ensure the ‘tightness’ would not occur.
“Unfortunately, what has happened since is that there have been unanticipated issues around gas-fired generation, which has led to more immediate supply problems.”
Home heating costs are set to balloon in the coming weeks as a winter cold snap grips the continent.
Rising energy costs have been responsible for most of the price inflation experienced by consumers in Ireland and other Eurozone economies this year. https://t.co/pklNuhLRaq
— TheJournal.ie (@thejournal_ie) December 22, 2021