Prime Minister Donald Tusk has condemned opposition-aligned President Karol Nawrocki’s “shocking decision” not to sign into law the government’s planned windfall tax on excess profits by fuel companies amid a sharp surge in fuel prices caused by the war in Iran.

While Nawrocki did not veto the bill, he exercised his right to refuse to sign it and instead send it to the Constitutional Tribunal (TK) for assessment, a process that can take years. The president argued that the retroactive nature of the tax “raises serious constitutional concerns”.

In mid-June, the government approved a 60% tax on excess profits from liquid fuel sales, calculated as the amount that would have been generated using a company’s average 2025 fuel sales margin, increased by 20%. The measure was expected to raise around 4 billion zloty (€927 million).

When announcing the plans, the finance ministry said the levy was justified by this year’s “exceptional economic and geopolitical conditions that have led to above-average financial results in a specific segment of the fuel sector, not resulting from improved operational efficiency…but from a supply shock”.

The tax was intended to offset the roughly 4.7 billion zloty the government spent on keeping fuel prices lower for consumers amid the crisis in the Middle East by, among others, cutting VAT and introducing a maximum daily price.

The bill was approved by parliament on 3 July. It received support from Tusk’s ruling coalition, which ranges from left to centre right, but was opposed by the right-wing and far-right opposition.

According to a regulatory impact assessment, state energy giant Orlen is expected to account for about 60% of the tax base for the windfall tax, with the remaining 40% generated by other market participants.

The legislation then passed to Nawrocki, who has vetoed a record number of bills since becoming president last year. However, this time he instead exercised his right to refer the bill to the TK without either signing or vetoing it.

In a speech announcing his decision on Friday, Nawrocki said that the proposed measures “raise serious constitutional concerns”. In particular, he criticised the fact that tax would be retroactive: it would go into force in August but would apply to revenue earned from the beginning of March.

“In a democratic state governed by the rule of law, citizens and businesses must know what regulations apply at the time decisions are made,” said Nawrocki. “The state cannot change the rules a few months later and send a bill for actions taken in accordance with applicable law.”

The president also argued that, ultimately, the costs of the tax would be passed on to consumers, who have already been paying much higher fuel costs since the government’s protective measures expired at the end of June.

“Unfortunately, it appears that the government first lowered fuel prices for propaganda purposes, and now has decided to impose a hefty bill on Poles,” declared Nawrocki.

Once a bill is sent to the TK for assessment, there is generally no time limit on how long the tribunal can take to consider it. In practice, this means that some cases can can remain unresolved for years. If the TK does find a bill to be constitutional, the president must sign it into law.

Currently, a majority of judges on the TK, including its chief justice, were appointed by and are regarded as aligned with the national-conservative Law and Justice (PiS) party that ruled Poland until 2023 and which supported Nawrocki’s presidential candidacy last year.

Nawrocki’s decision not to approve the windfall tax was condemned by government figures, including finance minister Andrzej Domański, who accused the president of “once again striking against Poland’s public finances”. In December, Nawrocki vetoed an increased tax on alcoholic and sweet drinks.

“Instead of standing on the side of Poles, he sided with fuel corporations reaping huge profits from the current situation on the fuel market,” wrote Domański on social media.

Tusk, meanwhile, wrote that the president had “blocked a bill that would have allowed taxing the gigantic profits of fuel conglomerates, making it possible to fund cheaper fuel at our stations”. He told consumers to “remember this [when you are] at the fuel pumps”.

In response, the head of Nawrocki’s cabinet, Paweł Szefernaker, called Tusk an “economic dilettante” for thinking that imposing a tax would somehow lower costs rather than cause prices to rise. He instead called on the government to again lower VAT and excise duty on fuels.

The dispute over the tax comes as Poland faces an increasingly difficult fiscal situation. It had the second-largest budget deficit in the European Union last year, at 7.3% of GDP. That was far higher than the 5.5% the Polish government had pledged in 2024 when it was placed under the EU’s excessive deficit procedure.

Data released last week by Eurostat showed that, in the first quarter of 2026, Poland had the EU’s third-largest annual increase in debt-to-GDP ratio, at 4.5 percentage points.

In March, credit rating agency Fitch, which last year switched Poland’s credit outlook to negative, warned that the “political gridlock” between the president and the government will continue to hinder policymaking, including tackling “large fiscal deficits and rapidly rising debt”.

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Main image credit: Orlen press materials