Without the tax subsidies applied by the government, the price of fuel would skyrocket. This is why the government will not abandon the reduced rate of ISP Petroleum Products Tax.
The European Commission (EC) approved the Medium-Term Budget Plan submitted by Portugal, but noted that the State Budget proposal for 2025 (OE2025) does not comply with all of the Brussels recommendations.
Miranda Sarmento already said this week that the reduction in rates will continue. “There is no intention to change this benefit“, said the Minister of Finance.
However, if Portugal followed EC instructions and the ISP was restored, Pedro SilvaEnergy and Sustainability market analyst at DECO PROteste says that “at the level it was in 2021, we would be talking about another 20 cents direct increase in fuel prices.”
The analyst further explains that “the impact on everyday life and on consumers’ wallets would be tremendous” and “quickly” we could see “gasoline prices reaching two euros and diesel ones close to that”.
As explained by , the ISP is applied to the gasoline and dieselbut also to other energy products, for example gas. Today, according to data from the National Entity for the Energy Sector (ENSE), the ISP has a weight of 42.49% in the fuel reference price.
This week, the European Commission once again insisted that the Portuguese government make changes to the ISP: “The point is that we have recommended that Member States should progressively withdraw emergency energy support measures which were introduced following Russia’s aggression in Ukraine and rising energy prices,” said the Executive Vice-President of the European Commission Valdis Dombrovskis.
Even so, ISP revenue is expected to increase next year in relation to all other taxes, in accordance with the OE2025 proposal. However, the government justifies this with the increase in private consumption.
This year, until September, and even though the ISP has increased, State spending on fiscal support for fuels was already at 785 million euros.
The increase in fuel prices is largely due to the carbon tax unfreezewhich began to be felt in prices since August this year. Currently, this fee reaches almost 20 cents.
