The Polish government has unveiled the full draft of a windfall tax on fuel companies. The levy will take 75 percent of revenues exceeding a set threshold and will apply retroactively from March 1, even though it will only come into force on August 1.
Contrary to its name, the tax is based on revenues, not profits. Only the portion of revenues that exceeds a legally defined reference level will be subject to the 75 percent rate. The draft law specifies a formula for calculating this threshold, which is meant to capture only extraordinary earnings.
Revenue-based, not profit-based
The government chose to tax revenues rather than profits to prevent companies from offsetting the levy with costs or deductions. – The tax applies to the part of revenues that sticks out above the permissible threshold, not to net income – explained the project’s justification. This approach ensures that the state receives a share of any windfall gains, regardless of the firms’ internal accounting.
According to the draft, the reference level will be based on average revenues from previous periods, adjusted for inflation and other factors. Companies that exceed this level will owe 75 percent of the surplus to the state budget. The tax is temporary, but its exact duration has not yet been specified.
Retroactivity and constitutional questions
The most controversial element is the retroactive effect. The law will be passed in late June or early July, but will cover revenues earned from March 1 onward. – In this extraordinary case, retroactive effect is justified and does not violate the constitution – the government’s justification stated. However, legal experts note that such a provision could be challenged in the Constitutional Tribunal, as retroactive taxation is generally prohibited under Polish law.
The Ministry of Finance estimates that the temporary levy will bring in PLN 5 billion. To put this in context, the government’s CPN program (a fuel price subsidy scheme) costs about PLN 1.6 billion per month. – The revenue from the tax will cover the CPN program’s costs for just over three months – said the draft’s financial analysis. If the government does not want to widen the budget deficit, it should consider ending the CPN subsidy by early July, the analysis suggests.
Critics argue that the tax may discourage investment in the fuel sector and that its retroactive nature sets a dangerous precedent. Supporters, however, view it as a necessary measure to recapture excessive profits while keeping retail fuel prices in check.
Źródło: WNP.PL, Fot. PAP/Marcin Obara
