Who benefited and who (if anyone) lost? An assessment of the reform of municipal revenues from personal income tax shares in Poland

This article presents a preliminary assessment of the distributional effects of the 2025 reform of personal income tax (PIT) revenue allocation in Poland, introduced by the Act of 1 October 2024. Using historical data from 2018– 2022, a simulation compares PIT revenues under the new and previous systems across four municipal types: rural, urban-rural, urban, and cities with county rights (CCRs). The results show that the reform strengthens the link between PIT revenues and local economic potential. While all municipalities gain nominally, benefits are uneven. Higher gains are associated with higher average wages, greater use of tax deductions, more non-agricultural employment, and a larger number of businesses. CCRs are most sensitive to income levels; rural municipalities the least. The study contributes to fiscal decentralization literature and offers insights for policymakers designing equitable intergovernmental fiscal systems.

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