The mayor of Warsaw, Rafał Trzaskowski, welcomed the PIT amendment with a bold shift: the tax-free amount was expanded dramatically, and the basic rate dropped from 17 percent to 12 percent. At a series of press conferences, some argued this would destabilize the capital’s finances, and they warned of looming problems for cities governed by the Civic Platform or other parties. Critics contended that local governments would suffer through reduced revenue, even as officials highlighted that residents would keep more of their income.
Other large city leaders echoed similar concerns, organizing public demonstrations in Warsaw and arguing that the fiscal health of their municipalities would not recover quickly from the PIT adjustment.
During multiple debates featuring local government representatives and their experts, the discussion focused on how budgets might be affected by the PIT cut. The counterpoint was that residents would retain more money in their pockets, while detractors emphasized potential drawbacks for local services and programs.
Surplus instead of deficit
Recently, the City of Warsaw reported preliminary 2022 budget results, showing a surplus rather than the expected shortfall of nearly PLN 2.9 billion. The year closed with a surplus of about PLN 0.5 billion.
Revenues, including tax receipts, exceeded a planned level by PLN 2.5 billion (with planned at PLN 19.1 billion and actual at PLN 21.6 billion), while expenditures slightly undershot expectations by PLN 0.9 billion. In sum, the mayor and city leaders acknowledged a miscalculation of at least PLN 3.4 billion in the 2022 budget, and a similar overestimate also affected the 2021 budget, where a deficit was forecast but a surplus of PLN 1.3 billion was achieved.
The stance taken by opposition-aligned local officials who critiqued the PIT and CIT tax cuts was part of a broader political campaign. Yet, by autumn of the previous year, the available data already suggested that the arguments did not align with the actual financial trajectory of the city.
It should be noted that early September data from the Ministry of Finance covered the first half of the year for all local government units, including municipalities, districts, and provinces. The information came from reports compiled by the units themselves. Data for the entire year 2022 would be published later in the year.
These figures showed total revenue of PLN 170.8 billion and total expenditures of PLN 156.4 billion across all LGUs, yielding a combined budget surplus of PLN 14.4 billion. When focusing on current income and expenditure, excluding real estate-related items, the operating surplus reached PLN 20.5 billion.
Compared with the previous year, local governments possessed stronger finances by mid-year, a notable improvement over the situation at the end of 2015, when the budget surplus stood at PLN 2.6 billion and the operating surplus reached PLN 18.2 billion. Despite these favorable indicators, opposition-linked officials remained vocal about potential damage from further tax reductions affecting local government revenue streams.
Support for local governments
In reality, tax relief, particularly for PIT, frees up substantial funds for residents. For instance, the 30,000 free amount and the rate cut from 17 percent to 12 percent, along with raising the annual tax threshold from PLN 85,000 to PLN 120,000, collectively left roughly PLN 30 billion in taxpayers’ pockets for the previous year. At the same time, rising energy prices prompted a package of financial support for localities connected to the changes in local government finances.
Altogether, the measures amounted to about PLN 13.7 billion, roughly a quarter of this year’s projected PIT revenues for local governments, which were planned at PLN 54 billion. Separately, a government program for strategic investments funneled PLN 54 billion to local governments in two installments, and additional funds were redirected from the local National Road Fund, plus nearly PLN 3 billion for post-state ownership municipalities. Investments in health, education, sports, culture, and social sectors continued, totaling an impressive sum exceeding PLN 85 billion.
Trzaskowski and the city’s management
There is scrutiny of Warsaw’s management under Mayor Rafał Trzaskowski, extending to critical infrastructure sectors such as sewage and waste handling. Recent reports outline notable failures in the sewage network, including large-scale discharges, and a corruption case linked to a municipal official. In political terms, Trzaskowski has faced questions not only about day-to-day governance but about balancing international engagements and national policy initiatives with local responsibilities.
Over the course of the year, projections that budget revenues would fall short gave way to the opposite reality: revenues came in higher than anticipated, while the overall deficit did not materialize as feared. Critics note that the mayor has time for broader political activity, including international policy and other campaigns, alongside his responsibilities for city management.
Notes on public sentiment and ongoing policy discussions reflect the tension between fiscal prudence and political strategy in Warsaw’s governance. The focus remains on how the city can sustain essential services, manage growth, and respond to residents’ needs in a changing economic climate.