* PiS ahead with 38 pct of vote - exit poll update
* Kaczynski immediately declares victory
* Exit poll suggests PiS could govern alone
* Election shows conservative swing in Poland
(Updates with updated exit poll figures at 00:20 GMT)
By Pawel Sobczak and Wiktor Szary
WARSAW, Oct 25 Poland's eurosceptic Law and
Justice party (PiS) claimed victory on Sunday in a watershed
election that risks putting the ex-communist state on a
collision course with key European Union allies.
Run by Jaroslaw Kaczynski, the twin brother of Poland's late
president Lech, PiS secured 38 percent of the vote, enough to
govern alone and well ahead of the incumbent, staunchly pro-EU
Civic Platform (PO) at 23.4 percent, said pollster IPSOS.
If the exit poll is correct, the victory by PiS would be the
biggest in terms of seats by a single party since Poland held
free elections after shedding communism in 1989 -- marking a
decisive swing to its brand of social conservatism mixed with
left-leaning economics in the country of 38 million people.
It would also be the first time that the socialist grouping
that grew out of the pre-1989 communist party failed to win
seats in parliament.
A triumphant Kaczynski, whose party immediately signalled
plans to reap new revenues from next year with a tax on bank
assets, declared victory.
"We will not kick those who have fallen. ... We need to show
that Polish public life can be different," Kaczynski told
jubilant supporters at his party headquarters in central Warsaw.
Prime Minister Ewa Kopacz of PO conceded defeat.
Poland has seen its economy, the largest in ex-communist
central Europe, expand by nearly 50 percent in the last decade,
with the pro-market Civic Platform focusing on trying to make
the most of EU aid and combining green field investment with
But pockets of poverty and economic stagnation remain, and
PiS was able to exploit growing frustration in some areas that
the spoils of economic success are not more evenly shared.
Distrustful of the EU and an advocate of a strong NATO
stance in dealing with Moscow, PiS opposes joining the euro zone
any time soon and promises more welfare spending on the poor.
It also wants to enshrine more Roman Catholic values in
Polish law, reflecting the party's deeply socially conservative
Two new parties appeared to have won seats in parliament.
The liberal, pro-market Nowoczesna, led by former World Bank
economist Ryszard Petru, was seeing winning 7.2 percent of the
Kukiz'15, an anti-establishment grouping led by rock star
Pawel Kukiz, looked set to secure 9.1 percent of votes.
The election of PiS likely means that Poland will join ranks
with Hungary and Slovakia in opposing relocation of migrants
from the Middle East and North Africa, deepening divisions in
the EU, where Germany's Angela Merkel in particular has
advocated a more open approach.
Kaczynski, a long-time fan of Hungary's right-wing Prime
Minister Orban, has said Muslim migrants threaten Poland's
Catholic way of life. Earlier this month he was accused by some
media in Poland of fanning racism when he said they would bring
new diseases and parasites to Poland.
The migrant crisis has led to a boost in support for
hard-right parties in countries including Sweden and the
On the campaign trail, Kaczynski and other PiS leaders
sought to tap into nationalist sentiment tied to fears over
immigration, particularly among young voters.
"The victory by PiS is part of a wider shift in Europe, of a
return to national values," said analyst Aleksander Smolar.
PiS advocates a robust Western approach towards Russia,
especially following Moscow's 2014 annexation of the Crimean
peninsula in Poland's eastern neighbour Ukraine.
That might complicate any future attempts at bridge-building
between the EU and Russia, currently the target of Western
sanctions imposed over the Ukraine conflict.
Markets have eyed the possible victory of PiS with growing
concern in the final days ahead of the vote, with the zloty
hitting a nine-month low. Economists said PiS plans to
tax banks threatened the flow of cash into the economy, while
welfare spending promises signalled less fiscal prudence.
A senior PiS official said on Sunday the party wanted to tax
banks' assets from next year.
"One of the first economic decisions of the new government
will be to submit an amendment of next year's budget," said
Zbigniew Kuzmiuk, who is tipped to play a major role in shaping
the new government's economic policies.
"We want, probably as of January 2016, to introduce two
taxes that are important for us, including a tax on banks - it
will be a tax on assets with a rate of 0.39 percent - and a tax
on supermarkets," he said.
He said the government would be committed to maintaining an
overall deficit below three percent of national output in line
with EU guidelines.
PiS will also have a chance to nominate the majority of
members of Poland's monetary policy council, giving the party de
facto control over interest rate policy. Its top politicians
have already signalled the grouping favoured a more pro-growth
More election stories:
(Additional reporting by Anna Wlodarczak-Semczuk, Anna Koper,
Pawel Florkiewicz, Marcin Goclowski, Marcin Goettig, Writing by
Justyna Pawlak and Gabriela Baczynska, Editing by Mark John,
Jonathan Oatis and Christian Plumb)