Poland to hike fuel, tobacco tax to boost 2012 budget

Poland plans to raise an additional 2.45 billion zlotys ($741 million) next year from higher excise tax on fuels and tobacco, according to a bill submitted by the government on Tuesday.

Last week, Prime Minister Donald Tusk announced reforms to cut spending and said he would lower the budget deficit to 3 percent of gross domestic product next year.

As most of the reforms will be implemented over coming years, the government still needs short-term measures to limit its budget shortfall in 2012.

At its first sitting since being sworn in last week, Tusk's cabinet also submitted proposals to freeze salaries of judges and scale down budget contributions for hiring disabled workers.

The three measures are part of a supplement to the budget bill and have yet to be approved by parliament, in which Tusk's coalition holds a slim majority.

"The government-proposed solutions supplement the country's 2012 financial plan, which holds curbing the speedy growth of public debt as one of its main goals, to avoid breaching 55 percent of GDP in 2012," the government said in a statement.

The Polish constitution mandates painful spending cuts if public debt tops 55 percent of GDP.

The cabinet did not estimate the overall effect of the supplementary measures on next year's budget.

Tusk, whose Civic Platform (PO) party won a parliamentary election last month, has said he will raise the retirement age and slash tax and pension privileges to try to ring-fence the European Union's largest eastern state from the debt crisis.

Finance Minister Jacek Rostowski has prepared three economic scenarios for next year's budget ranging from a 1 percent contraction to 3.2 percent growth.