Poland Announces Radical Fuel Tax Cuts and Price Caps to Combat Middle East War Spikes

Poland's Prime Minister Donald Tusk announced a sweeping fuel price intervention package on Thursday, March 26, 2026, cutting VAT on gasoline and diesel from 23 percent to 8 percent and reducing excise duty to minimum EU-permitted levels, with retail prices expected to fall by approximately 1.2 Polish zloty per liter. The package, branded CPN (Ceny Paliw Niżej) — "Fuel Prices Lower" — was unveiled at an extraordinary meeting of the Council of Ministers convened Thursday afternoon. Tusk described the package as "the most massive proposal one can imagine" in terms of government intervention. A particularly notable element is the introduction of a daily maximum fuel price to be set by the minister of energy, a mechanism Tusk acknowledged must "always be done with great caution" but which the government deemed necessary. The prime minister assured Poles that there is no risk of fuel shortages, stating that "Poland is secure" in terms of supply. „We must ensure the lowest possible fuel prices from the point of view of every consumer. At the same time, we had to make sure that, in the process, no one would make money out of the pockets of Poles.” — Donald Tusk via Business Insider

Budget takes PLN 1.6 billion monthly hit Minister of Finance and Economy Andrzej Domański presented the precise fiscal costs of the package at Thursday's press conference, estimating the VAT reduction alone would cost the state budget PLN 900 million per month, while the excise duty cut would add a further PLN 700 million monthly. Domański stressed the measures are temporary in nature and that the government would "flexibly adjust excise and VAT rates to the changing market situation." He also announced that work is beginning on a windfall tax on excess profits for fuel companies, intended to offset the budget shortfall by taxing firms that benefit disproportionately from high oil prices and elevated margins. Domański noted that on Thursday wholesale diesel prices fell by 30 groszy, even as crude oil prices rose again on global markets. The excise duty reduction amounts to 29 groszy per liter for gasoline and 28 groszy per liter for diesel, brought down to the minimum levels permitted under EU regulations.

CPN Package — Key Tax Changes: VAT on fuels (before: 23%, after: 8%); Excise duty on gasoline (before: Standard rate, after: Reduced by 29 groszy/liter (EU minimum)); Excise duty on diesel (before: Standard rate, after: Reduced by 28 groszy/liter (EU minimum))

Oil prices surged 45 percent since Middle East war began The government's intervention is a direct response to fuel price spikes triggered by the ongoing US-Israeli war on Iran, which began on February 28, 2026. According to Domański, oil market prices have risen by 45 percent in recent weeks, with diesel prices up over 40 percent and gasoline prices up over 20 percent, as reported by Gazeta Prawna. Web search data indicates European gas prices have increased by more than 60 percent since the conflict began, a figure higher than the 45 percent cited by Domański for oil markets — the discrepancy likely reflects different commodities and measurement periods. Refleks analyst Rafał Zywert calculated that the combined VAT and excise cuts would bring diesel prices down by an average of 1.36 zloty per liter and petrol by 1.16 zloty per liter. Zywert also noted that a correction was already underway on wholesale markets, with wholesale diesel prices falling by 500 zloty net per tonne since Monday and petrol by 100 zloty net, partly driven by reports of peace talks between the United States and Iran. The current purchase price of diesel at stations, taking discounts into account, stood at approximately 7.95 zloty per liter gross, and petrol at 6.56 zloty per liter gross, according to Zywert.

Poland has used emergency fuel tax interventions before, most recently during the energy crisis triggered by Russia's war on Ukraine in 2022, when VAT and excise reductions were introduced and later proved difficult to reverse. Energy analyst Wojciech Jakóbik noted that "energy prices frozen in 2022 were still frozen for several years after the situation calmed down," illustrating the political difficulty of unwinding such measures. The current crisis follows the outbreak of the US-Israeli military campaign against Iran on February 28, 2026, which disrupted global oil supply chains and sent energy prices sharply higher across Europe.

Senate called for emergency Friday session to fast-track bills Marshal of the Senate Małgorzata Kidawa-Błońska announced she was convening an additional Senate sitting for Friday at 2 p.m. to process the legislation on excise duty and VAT reductions. Tusk expressed confidence that both parliamentary votes and the presidential signature would follow "as quickly as possible," with the explicit goal of having the tools in place "before the holidays." Energy sector analyst Wojciech Jakóbik, commenting for wnp.pl, praised the decision to update maximum prices on a daily basis rather than freezing them outright, arguing this approach minimizes market distortions by tracking real conditions. Jakóbik also warned, however, that lowering VAT and excise duty is "the most costly and risky" element of the package, because it will stimulate demand and could send a signal that more fuel can be purchased, adding inflationary pressure elsewhere in the economy. He additionally suggested the government consider releasing part of strategic fuel reserves held by companies and the state, noting that Poland's membership in the International Energy Agency would allow it to participate in a coordinated stock release to increase supply and dampen prices without reducing fuel availability. „Miracles will not happen. There will be very serious and responsible policy so as to protect the wallets of Polish families as much as is possible.” — Donald Tusk via polsatnews.pl