A distinctive feature of this study is its cause-and-effect approach. The report traces the economic and fiscal processes that made the tax measures proposed by the government virtually inevitable. The analysis is based on the premise that the 2027 tax policy is a consequence of structural imbalances that accumulated during the 2021–2026 period.
The LDPM’s analytical note identifies protracted economic stagnation, high inflation, the consequences of the energy crisis, accelerated growth in government spending, rising public debt, a decline in the number of operating enterprises, difficulties faced by small and medium-sized enterprises, and the relocation of some business activities outside the country. These processes have reduced the economy’s ability to generate sufficient tax revenues to finance government spending.
Based on the analyzed data, the study concludes that the new tax concept is aimed primarily at fiscal consolidation through the expansion of indirect taxation, primarily via VAT and excise taxes. From a technical standpoint, these measures may help reduce the budget deficit in the short term. However, from an economic and social perspective, they shift a significant portion of the costs of fiscal adjustment onto consumers, socially vulnerable households, and small businesses.
The analysis predicts that the most likely consequences of the reform will be a rise in the cost of living, a decline in domestic consumption, additional inflationary pressure, a decline in the competitiveness of certain economic sectors, and increased difficulties for the business environment. The consequences will be felt most acutely by retirees, low-income families, agricultural producers, and small business owners.
The report’s fundamental conclusion is that the fiscal tightening of 2027 is evidence of the failure of the PAS government’s policies and can be viewed as an indirect admission of its inability to ensure economic growth, attract investment, and develop the manufacturing sector. The study argues that reducing the budget deficit by increasing indirect taxation cannot replace economic development policies and is not capable of restoring the state’s tax base on its own.
For this reason, the analysis recommends broadening the public discourse beyond a narrow focus on taxes and fees and shifting attention to the root causes of the national economy’s decline.
