Budget Won't Gain Billions from VAT Gap. New Expert Report Debunks Myths

The latest report prepared by a team of experts, widely discussed in "Rzeczpospolita" and on economic portals, brings pessimistic news for the Ministry of Finance. The analysis proves that the VAT gap has ceased to act as a "safety valve" for public finances. For years, politicians of various persuasions argued that fighting tax fraud could be an almost inexhaustible source of funding for social and investment spending. Current data, however, suggest that the margin of error in the system has been reduced to a natural level, resulting from administrative mistakes and company bankruptcies, not from large-scale fraud. Specialists emphasize that most of the easily recoverable funds have already been secured thanks to the introduction of tools such as JPK (Standard Audit File) or the split payment mechanism. Currently, every additional zloty recovered from the system costs the state more and more in administrative terms. This means the government can no longer plan next year's budgets based on spectacular increases in tax collection. Experts brutally assess that claims about the possibility of obtaining an additional dozen or so billion zlotys annually solely by tightening the system are a myth that cannot withstand a collision with hard economic statistics. In the years 2016-2021, Poland recorded one of the fastest declines in the VAT gap in the European Union, which allowed for the financing of broad protective programs, but since 2022 this trend has slowed down.In the face of the state's growing borrowing needs and the necessity to maintain fiscal discipline, the lack of additional VAT revenues is becoming a serious structural problem. Media point out that this situation will force the ruling authorities to either seek savings in expenditures or introduce new levies. The dominant narrative in publications indicates that the period of "rent from tightening" has irrevocably passed, which calls into question the financing of some electoral promises without increasing the budget deficit or public debt. „VAT gap is not a bottomless piggy bank.” — Expert report In summary, the collected articles create a coherent picture of the end of an era in the Polish economy. The government, which counted on billions from taxes, must now verify its financial strategy. Experts warn against excessive optimism, pointing out that real revenues will oscillate around standard consumption growth indicators, not spectacular successes in the fight against the shadow economy. This situation is all the more difficult because it concerns a key source of state revenue, which accounts for almost half of budget inflows.