Poland’s finance minister resigns after backlash over tax reforms

Poland’s finance minister Tadeusz Koscinski has resigned following a backlash over how the government has implemented a flagship package of tax reforms.

The so-called Polish Deal, which took effect at the beginning of this year, includes a series of spending pledges and tax changes for lower and middle earners that the ruling Law and Justice party (PiS) hoped would boost both the economy and its own flagging popularity.

However, the package has proved to be contentious and has led to confusion over the effect of some of the changes. Some lower earners received less income in January than expected, even though officials had said that only the highest earners would be affected.

“At the end of the day, I am the captain, I take responsibility,” Koscinski, a former banker who took over as finance minister in 2019, told the Financial Times.

A spokesperson for PiS said that Prime Minister Mateusz Morawiecki, himself a former finance minister, would take over Koscinski’s responsibilities until a permanent replacement was chosen.

Jaroslaw Kaczynski, a co-founder of PiS and Poland’s de facto leader, responded to the criticism of the Polish Deal last week, saying that “a radical correction and certainly. . . political decisions including about personnel ”were necessary. His comments sparked speculation that changes at the finance ministry could be imminent.

The decision over who replaces Koscinski, a close ally of Morawiecki, will be read as a barometer of the delicate balance of power in the ruling camp, which has become increasingly fractious over the past 18 months.

Among those mentioned as possible successors to Koscinski, Artur Sobon, who was appointed deputy finance minister last month, is seen as the closest to Morawiecki. Two others mentioned as possibilities – Piotr Nowak and Henryk Kowalczyk – are regarded as closer to other factions within government.

“For the time being, there is no change in the balance of power because the prime minister is able to supervise the ministry of finance,” said one person close to the government. “But to make a final call on what is really going on we will have to wait for a decision on who will be appointed as the new minister.”

Poland’s economy has grown rapidly over the past 30 years and weathered the pandemic better than most others in the EU, but the economic challenges for the next finance minister are mounting.

As well as remedying the problems with the Polish Deal, one of the biggest challenges will be dealing with surging inflation, which hit 8.6 per cent in December – its highest level for more than two decades.

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