This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
However, as we have repeatedly emphasized in these pages, the key measure for assessing the state of Poland’s public finances is not the central government budget deficit itself, but the general government deficit, calculated according to EU methodology.
VAT disappoints
How have VAT receipts – by far the most important source of tax revenue for the state budget – performed so far? From the start of the year through August, they totaled PLN 218.8 billion, up PLN 4.2 billion, or 2%, from the same period last year. That is far below the growth assumed in the 2026 budget act, which projected VAT revenues to rise by 6.2%.
Meeting the original revenue target is now unrealistic. In the remaining months of the year, growth would have to accelerate from 2% so far to 14.7%. The Ministry of Finance itself acknowledges this. In the draft 2027 budget submitted to the Social Dialogue Council, the ministry now expects VAT revenues of just PLN 332 billion in 2026, PLN 9.5 billion less than it forecast a year earlier. Even achieving that revised projection would require full-year VAT revenue growth to accelerate to 5.8%.
Interactive chart In August alone, VAT revenues rose by just 2% year on year. Payments recorded that month relate to July tax returns, so they do not yet reflect the impact of the government’s Lower Fuel Prices program (CPN), which was not yet in force in July. The VAT rate on fuel was cut from 23% to 8% on August 17, meaning the impact will begin to show up in revenues from September.
Excise revenues strengthen in August
Excise-tax revenues totaled PLN 60.5 billion, around PLN 1.4 billion, or 2.4%, more than in January–August 2025. In August alone, revenues posted their first solid increase in several months, rising by 7.6% year on year.
Interactive chart Revenues below levels projected two years ago
Projected VAT and excise-tax revenues for 2026 are nevertheless set to come in below the amounts originally assumed in the 2025 budget. In the case of VAT, the 2025 budget act projected revenues of PLN 349.5 billion. The forecast was later cut to PLN 325 billion, while actual receipts ultimately came to PLN 321.6 billion. For 2026, the initial target was PLN 341.5 billion, but the current forecast is PLN 332 billion. That is PLN 17.5 billion less than the amount projected two years ago for 2025.
The picture is similar for excise duties. The 2025 target was PLN 98.1 billion, while actual revenues came to PLN 92.5 billion. This year’s forecast has meanwhile been cut from PLN 103.3 billion to PLN 94.5 billion. This means that despite the increase in the economy’s nominal value, projected revenues from both taxes remain below the levels planned two years ago for 2025.
Optimistic forecasts and systemic changes
One reason for the revision is the lower base for both taxes, reflecting overly optimistic revenue forecasts made by the Ministry of Finance when the previous budget act was being prepared in August 2025.
This year’s VAT receipts are also being affected by measures whose impact was not factored into the 2026 budget. The ministry estimates that the temporary VAT cut on fuel under the CPN program will reduce revenues by around PLN 3.4 billion, while the VAT exemption for purchases financed under the SAFE program will cost a further PLN 4.5 billion.
The ministry also points to a one-off revenue shortfall of PLN 2.7 billion linked to shortening the VAT refund period from 60 to 40 days, as well as a PLN 0.9 billion loss resulting from the veto of legislation that would have extended the SENT monitoring system to trade in concrete. In the case of faster VAT refunds, however, the impact of the change should already have been known when the 2026 budget was being prepared.
The forecast for excise-tax revenues in 2026 has likewise been cut, from PLN 103.3 billion to PLN 94.5 billion. Among the reasons cited by the Ministry of Finance are the veto of a 15% increase in excise duty on alcohol, which reduced expected revenues by around PLN 1.5 billion, and the temporary cut in fuel excise duty under the CPN program. The latter is estimated to cost PLN 1.8 billion.
The outlook for budget revenues in 2026 has therefore deteriorated markedly, as illustrated by the substantial downward revisions to projected VAT and excise-tax receipts. Against that backdrop, the increase in the projected general government deficit from 6.5% to 7.1% of GDP is hardly surprising.