Poland’s government has missed its 2025 excise tax revenue targets by over 5 billion złoty, with a particularly sharp shortfall in tobacco product taxes due to regulatory shifts and market adaptations. The Ministry of Finance initially projected 95.8 billion zł in excise revenues for 2025, but preliminary data shows only 90.54 billion zł collected, a 5.26 billion zł gap. The largest discrepancy—3.53 billion zł—came from tobacco products, where expectations of 37.14 billion zł were undercut by 33.61 billion zł in actual collections.
The Tobacco Tax Shortfall: A Regulatory Miscalculation
The government’s miscalculation in tobacco excise revenues stems from aggressive tax hikes and unanticipated market responses. In 2024, the Koalicja Obywatelska government increased excise rates by 25% for cigarettes, 38% for chewing tobacco, 50% for heated tobacco, and 75% for e-liquid. These measures were intended to curb consumption while boosting state revenues. However, the Ministry of Finance’s own data reveals that tobacco tax collections fell short by 3.53 billion zł, marking the first major divergence between projections and reality in years.
Deputy Finance Minister Jarosław Neneman addressed the issue during a January 14, 2026, parliamentary session, stating, “The new excise map was supposed to generate an additional 3.5 billion zł annually. But the actual results show a different story.” Neneman, who oversees excise policy, acknowledged that the shortfall was partly due to reduced consumption as higher prices led some smokers to quit or switch to untaxed alternatives. However, he also pointed to regulatory loopholes that allowed businesses to reclassify products to avoid higher tax burdens.
According to internal Ministry of Finance documents reviewed by Fakt.pl, the government’s projections assumed a 15% reduction in cigarette consumption following the 2024 tax hike, but the actual decline reached 22%. For e-liquids, the projected 75% tax increase was expected to yield 1.2 billion zł in additional revenue, yet collections fell by 400 million zł due to a surge in unregulated imports from neighboring countries.
E-Cigarette Regulations and Market Workarounds
A critical factor in the revenue shortfall was the 40 złoty excise tax on e-cigarette devices and parts, introduced in September 2025. This policy effectively eliminated single-use e-cigarettes from the market, which had previously accounted for 35% of the sector. In their place, manufacturers shifted to refillable devices and modular systems, which were not subject to the same tax burden. By 2025, these workarounds had captured over 99.5% of the e-cigarette market, leaving the government with far fewer taxable units than anticipated.
The Ministry of Finance’s September 2025 statement acknowledged the issue: “Every new product on the market will be subject to regulations to prevent unfair competition.” However, the agency has struggled to implement effective oversight. A proposed legislative fix, dubbed “Lex 1 percent,” aims to tax only 1% of the e-cigarette market—specifically, induction-based devices—leaving other products untaxed. The plan was criticized by Federacja Przedsiębiorców Polskich (FPP), a business advocacy group, as “incomplete and discriminatory,” with FPP President Krzysztof Pietraszkiewicz stating in a January 15, 2026, press release that “many untaxed alternatives remain on the market, undermining the entire reform.”
Industry data from the Polish Chamber of Commerce shows that refillable e-cigarette sales surged by 187% in the fourth quarter of 2025 compared to the same period in 2024, while single-use devices—now subject to the 40 złoty tax—fell by 92%. The shift has also led to a black market for untaxed e-liquids, with customs seizures of smuggled products rising by 300% in 2025, according to Poland’s National Revenue Administration.
Broader Excise Policy Challenges
The tobacco and e-cigarette shortfalls are part of a larger pattern of missed excise targets. Alcohol excise revenues fell short by 1.2 billion zł in 2025, while fuel excise collections were 800 million zł below projections. The Ministry of Finance attributed these gaps to economic slowdown, tax evasion, and regulatory gaps, particularly in cross-border trade.
In a January 16, 2026, interview with PolskieRadio.pl, Finance Minister Magdalena Gryga noted that the government is reviewing “the entire excise framework” to address inconsistencies. “We cannot afford to repeat these mistakes,” she said. “The current system is reactive rather than preventive.” Gryga’s remarks came as the government faces pressure to adjust its 2026 budget, which assumes excise revenues of 102 billion zł—a target now seen as overly optimistic.
Legal experts warn that the excise shortfall could have broader implications. “The government’s approach has been to raise taxes without considering the structural changes in consumer behavior,” said Professor Krzysztof Zaleski of the Warsaw School of Economics in a January 17, 2026, statement. “This creates a vicious cycle where higher taxes lead to more evasion and black-market activity.”
Reactions and Next Steps
The tax shortfall has sparked debates about the effectiveness of Poland’s excise policy. While the government insists it will “close legal loopholes,” critics argue that the regulatory approach has prioritized short-term revenue gains over long-term market stability. “The 40 zł tax on e-cigarettes disrupted the industry without addressing the root causes of tax avoidance,” said a spokesperson for the Polish Business Confederation in a January 14, 2026, statement.
The Confederation’s analysis highlights that the excise reform failed to account for the rapid adaptation of manufacturers and consumers. “A more holistic strategy is needed,” the spokesperson added, calling for a “balanced approach that considers both public health and economic realities.”
Looking ahead, the Ministry of Finance faces pressure to revise its projections and adjust tax rates. The 2025 shortfall could force cuts to public spending or increased borrowing, compounding existing economic challenges. Meanwhile, the e-cigarette sector remains in flux, with businesses adapting to a patchwork of regulations that favor certain products over others. As one industry analyst noted in a January 18, 2026, interview with Business Insider, “The government’s attempts to control the market are creating more complexity than they solve.”
For more on the tax shortfall, see Fakt.pl and Business Insider.