Poland Revives Windfall Tax on Oil Firms to Fund Fuel Price Relief

Poland's government is pushing ahead with a windfall tax on oil companies' excess profits, aiming to use the proceeds to bring down fuel prices, Prime Minister Donald Tusk said on Tuesday. He called on President Karol Nawrocki not to block the measure a second time.

The proposed levy would take 60% of excess revenue earned by oil companies between March and December 2026, a period the government expects to yield about 4 billion zlotys ($1.06 billion) annually.

The bill was previously rejected by President Nawrocki, an ally of the nationalist opposition, who referred it to the Constitutional Tribunal in July. The tribunal has not yet ruled, but the government has revived the legislation and was due to approve it on Tuesday before sending it back to parliament.

"I guarantee that if the president finally signs the recently resubmitted law on extraordinary profits, we will immediately implement another option to reduce fuel prices," Tusk said before a cabinet meeting. "We shall see how far the funds go. But I hope no one has any doubts left that this bill must be signed. It is not the people who should pay for this fuel crisis. It is not the Polish people who are responsible for this fuel crisis."

The government has already taken other steps to cushion fuel costs. In March it introduced a price-cap programme that ran until July and cost the budget approximately 4.7 billion zlotys. A lower VAT rate on fuel was also in effect during the last two weeks of August.

Global market turmoil during the Iran war has driven fuel prices sharply higher, boosting the earnings of fuel companies, primarily Orlen in Poland. According to a government document, Orlen's revenue grew by nearly 26% year-on-year in the second quarter, while its LIFO EBITDA jumped by more than 54%.

Consumers, meanwhile, have faced a significant rise in pump prices, and the transport sector has absorbed higher costs, adding to inflationary pressure.