Poland Cuts Gas Tax to Ease Consumer Woes

Poland on Thursday became the first European Union country to cut its excise tax on gasoline in response to high oil prices, a decision that has already eased costs at gas stations.

The Polish Finance Ministry reduce the excise tax by 16 percent, or 0.25 zlotys ($0.08), per liter, bringing the cost for a liter of gasoline at the pump to around 4.35 zlotys ($1.37), or $5.21 per gallon.


The tax had accounted for 37 percent of the full price of a liter of gasoline in Poland. Total taxes, including value added tax or VAT, comprise 60 percent of the price.

Poland's decision comes despite last week's European Commission warning to its 25 member states against cutting fuel taxes in response to rising oil prices, which spiked to more than $70 per barrel after Hurricane Katrina struck the oil refining region of the U.S. Gulf Coast before falling back.

The Polish government made its decision before the commission's warning, but intends to stick to it until gas prices fall to July levels, said Finance Ministry spokeswoman Anna Sobocinska. Prices rose almost 0.20-0.30 zlotys ($0.08) per liter in the past three weeks.

EU governments have been struggling with growing discontent about rising oil prices.

France announced a partial tax refund Tuesday for poor farmers reliant on fuel, and threatened oil companies with a windfall tax unless they kept prices lower.

The Hungarian government plans to cut its value-added tax on gas and fuel prices from the current 25 percent to 20 percent from Oct. 1, bringing forward relief that was supposed to take effect in January.

In Austria, the government reached an agreement with oil companies to cut gas prices 0.02-0.03 euros ($0.03-0.04) per liter. Vienna had threatened a special tax if the oil companies had refused.

Gas prices at some stations in Poland had already fallen 0.10-0.20 zlotys ($0.03-0.06) by early Thursday. The decision to lower pump prices belongs to gas station owners, and costs will not necessarily drop everywhere.

(Source: Washington Post/ Associated Press)

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