The European Commission has once again urged Portugal to end the ‘bonus’ or discount on the Tax on Petroleum Products (ISP), prompting the government to consider “adjustments” in fuel prices as a result of this measure.
The Minister of Economy and Territorial Cohesion, Manuel Castro Almeida, acknowledged this week that “Portugal has long been in violation on this issue, but has been making adjustments.”
“Last year, we already made adjustments as the EC [European Commission] wants,” the minister said, warning that “this, of course, requires changing the final price of gasoline and petroleum products, which is not good news.”
The minister made it clear: “We have been resisting,” but it is not possible “to resist forever.”
What will the Government do?
According to the Minister of Economy, “it will be necessary to make adjustments,” but the government’s position last year was to only make adjustments during periods when there is “a drop in gasoline prices so that people do not feel they are paying more for gasoline due to tax increases.”
However, he stressed, “it is unthinkable to do it all at once” because, according to the Jornal de Negócios, if the bonus reversal were complete, it would signify “an increase of about 10%.”
ACP issues warning
According to the Automóvel Club de Portugal (ACP), “if the government decides to comply with the demand and completely remove the ISP discount, fuel prices could rise significantly.”
“Estimates based on data from the Directorate-General for Energy and Geology (DGEG) indicate that the price of simple 95 gasoline could increase by up to 16.2 cents per liter, representing a rise of 9.5%,” the ACP added.
“Taking into account that the average price per liter of gasoline recorded on September 30 is 1.707 euros, this increase would raise the average price of simple 95 gasoline to 1.869 euros.”
For diesel, “the increase could reach 14.4 cents, raising the price from the current 1.572 to 1.716 euros per liter, an increase of 9.2%,” explains the ACP.
Impact assessment
In practice, the ACP explains that “this aggravation could have a direct impact on costs borne by consumers.”
“Assuming a reference tank of 50 liters, refueling a gasoline vehicle would now cost about 93 euros instead of the current 85 euros. In the case of a diesel model, the increase would be 7.3 euros from the current 78.5 euros to 85.8 euros,” the ACP clarifies.
The ACP notes, however, that “the pressure to remove this support has been ongoing for three years,” with the European Commission now inviting the Portuguese government to present an update on progress made and measures planned to eliminate emergency energy support.
“At the same time, it emphasizes the call for decisive action to align fiscal policies with the environmental and budgetary objectives of the European Union,” it recalls.
ACP opposes changes
The ACP has already expressed its opposition to the end of the ISP discount. The club’s President, Carlos Barbosa, considers these changes “dramatic.”
“Most small and medium-sized enterprises will not be able to bear the cost of fuel,” warned Carlos Barbosa, quoted in the note released, noting that fuel prices “account for 30 to 35% of the costs of these companies.”
