World Bank: AI Set to Cost Poland's Budget Billions in Tax Revenue

Artificial intelligence is expected to lift Poland's GDP by as much as low double digits over the next decade, but the same process will hit the state budget where it hurts most: taxes on labor. That's the conclusion of a World Bank report that has drawn detailed analysis in Polish economic media in recent days, along with early reactions from economists to a proposal to raise corporate tax (CIT) as compensation.

Poland became the first country in the world to serve as the testing ground for a new World Bank macroeconomic method for calculating AI's impact on the economy, based on an occupational exposure to automation index developed by the International Labour Organization. The report, published at the end of June, finds that programming, information services, finance and professional services will see the biggest productivity gains, while construction will benefit indirectly through investment in data center infrastructure.

Where the PIT and ZUS shortfall comes from

The mechanism is simple and has been well known to economists for years: AI replaces some of the work previously done by people, and machines don't pay income tax or social security contributions. The more tasks algorithms take over, the smaller the tax base on labor becomes, even if the companies using AI become more profitable and pay more in corporate tax.

The World Bank estimates that at its peak, the shortfall in labor tax revenue could reach as much as 1 percent of GDP. A 0.1 percentage point increase in CIT revenue and a 0.3 percentage point increase in VAT revenue, driven by higher corporate efficiency and greater consumption from a wealthier society, would not fully offset that loss.

Dispute over raising CIT

The debate sparked by the report has produced one concrete proposal: raising the CIT rate from the current 19 percent to 21 percent, moving closer to the OECD average of 24 percent. Such a step would bring the budget an additional 0.5-0.6 percent of GDP a year, partly plugging the hole left by falling PIT and ZUS revenue.

The CIT rate in Poland should not be raised, because tax hikes lead to erosion of the tax base - Kamil Sobolewski, chief economist at Pracodawcy RP (Employers of Poland)

A significant part of the economic community opposes this solution, however. They argue that raising the burden on businesses in response to the AI revolution could discourage companies from investing in automation exactly when Poland needs it most, so as not to fall behind economies that are already adopting AI faster.

CIT is a relatively inefficient source of budget revenue - Łukasz Kozłowski, chief economist at the Federation of Polish Entrepreneurs

Kozłowski also points to another problem: adjusting the CIT rate in Poland would do little to change the global picture, since the country isn't home to the largest companies building and distributing AI systems, which pay taxes where they're headquartered, most often in the United States.

AI adoption among Polish companies

The report's second thread concerns the pace at which Polish companies are adopting AI at all. Currently just 8.4 percent of businesses do so, and usually in a single, narrow business process rather than across the board. The World Bank projects that by the 2030-2035 turn of the decade, that share will rise to around 45 percent, a fivefold jump in adoption in under ten years.

That pace will determine whether Poland manages to harness AI for economic growth before the shortfall in labor taxes starts to weigh heavily on public finances. The report stresses that labor market, education, social protection and fiscal policies will all be critical: without them, AI gains won't automatically translate into a higher standard of living and better jobs.

What it means for Poland's budget

For the finance ministry, the World Bank report is a signal that a tax system designed around an economy based on human labor will need to be rebuilt within the next decade. It's not just about rates, but about shifting the tax burden away from a shrinking labor base toward capital and technology rents, as the report itself suggests, though economists disagree on exactly what form that shift should take.

So far the government hasn't announced any concrete change to tax rates. The debate that flared up after the report's publication is preparatory in nature, but with AI adoption among Polish companies projected to grow fivefold within a decade, pressure for fiscal decisions will only increase.

Sources: Rewolucja AI uderzy w budżet, "The AI revolution will hit the budget" (parkiet.com), AI uszczupli wpływy z PIT i ZUS. Czy Polska będzie musiała podnieść CIT?, "AI will shrink PIT and ZUS revenue. Will Poland have to raise CIT?" (parkiet.com), AI Could Boost Poland's Economy by Up to 12% by 2035, New World Bank Group Report Finds (worldbank.org)