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Ruling party Civic Platform (PO) has ruled out increasing personal income tax (PIT) but could take a decision on Friday to raise Value Added Tax (VAT).

A one percentage point increase to the tax could be implemented for three years on all goods, with the exception of food and possibly medication. It could inject an extra zł.5 billion into the budget, Sejm Speaker Grzegorz Schetyna has said.

If the planned tax hike is enforced, the new 23 percent VAT will be the fourth highest level of taxation on goods in the EU. There is a 25 percent VAT in Denmark and VAT stands at 24 percent in Sweden and Hungary.

The government also intends to introduce a spending rule in an attempt to further limit the budget deficit. Nevertheless, next year's deficit is set to be high anyway.

"The government is considering qualifying the budget deficit at a level of zł.45-47 billion, but that may still change," Public Finance Comission (KFP) chairman Paweł Arndt said. PO's parliamentary club leader Tomasz Tomczykiewicz assured there would be no increase to income tax, nor will tax on pension contributions change.

The changes to Poland's taxation system are expected to be determined in a plan for public financing to be debated by the government on Friday.

Poland AM