The head of Prime Minister Donald Tusk's economic advisory team, Michał Boni, caused waves on Tuesday by suggesting that tax increases might be in store.

“We have to consider all the options available to avoid the dangers that come with the budget deficit. We cannot rule out a public debate on a potential increase in taxes” Mr Boni told TOK FM on Tuesday.

He added that it could be considered whether the losses incurred by the budget due to the earlier reduction of taxes and social insurance contributions (in effect from 2009) shouldn't be made up for.

Mr Boni said the reduction in social insurance contributions – and specifically disability pension contributions – by seven percentage points was costing the Social Insurance Institution (ZUS) zł.20 billion a year. The reduction in personal income taxes from three rates of 19, 30 and 40 percent to two rates of 18 and 32 percent was costing the budget zł.7-8 billion annually, he added.

The prime minister's adviser emphasized that no decision has yet been taken on the matter.

The government is also considering an increase of VAT from 22 to 25 percent, which would bring the budget an extra zł.15 billion a year, according to daily Rzeczpospolita.

“An increase in taxes is one of the measures that the government might take to curb the deficit. However, reversing decisions taken by the previous government [and current opposition] will be tricky with local government and parliamentary elections coming up,” said Grzegorz Maliszewski, chief economist at Bank Millennium.

“An increase in indirect consumption taxes such as VAT is more likely,” he added.

Mr Maliszewski also said that although an increase in taxes would be damaging to the economy in the short-term, the impact would not be so negative in the long-term as it would help to reduce the budget deficit.

The Finance Ministry declined to comment on Mr Boni's statements.