Poland will hike business taxes on banks from 19 to 30 percent next year to offset greater defence spending, under a plan adopted by the government on Tuesday.
Sitting on NATO’s eastern flank and bordering both war-torn Ukraine and Russia’s Kaliningrad region, Poland is one of the alliance’s biggest military spenders.
Under next year’s government budget, 4.8 percent of Poland’s entire GDP will be assigned to defence. NATO allies have vowed to boost defence spending to five percent of national output by 2035, with Poland leading the pack.
To pay for this, Prime Minister Donald Tusk said, the nation’s banking sector will see a one-off hike in corporate tax, rising to 30 percent next year, tapering to 26 percent in 2027 before falling to 23 percent the year after that.
Announcing the plan, Tusk said if Poland “is to be a state that takes care of the weakest, that guarantees higher wages, a state that must be safe — and this requires gigantic investments in our army — it simply means we need more money”.
According to the finance ministry, Poland’s ratio of public debt to GDP will reach 48.9 percent in 2025 and peak at 59.5 percent in 2029 — and so not exceed the constitutional threshold of 60 percent.
But the project must first be approved by the parliament and Poland’s newly elected populist president, Karol Nawrocki, who promised during his campaign that he would veto any tax rises.