The government admits to reinforcing the discount applied to fuel tax if prices continue to rise in the coming weeks. The possibility was admitted by the Minister of Finance, Joaquim Miranda Sarmento, who explained that the mechanism created to respond to rising energy prices can remain active and even be strengthened.
The statement was made in Brussels at a time when the price of oil has risen again and energy markets remain under severe pressure. According to the ECO newspaper, which specializes in economics, the official indicated that the system currently in force allows the discount applied to the Tax on Petroleum and Energy Products to be adjusted whenever prices increase again.
Rising oil prices put pressure on fuel prices again
In recent weeks, energy markets have registered strong volatility, closely associated with geopolitical instability in the Middle East. Increased tensions and fears of interruptions in energy supplies have contributed to new increases in the price of oil, which has now once again surpassed the $100 per barrel mark.
This type of evolution tends to be quickly reflected in the final price paid by consumers at gas stations. Whenever oil prices rise significantly, the impact also ends up affecting the price of diesel and gasoline.
The mechanism created to stop part of the climbs
To try to mitigate the impact of these variations, Portugal has used a tax compensation mechanism applied to the ISP. This system allows the fuel tax to be adjusted when prices register significant increases.
As ECO explains, the objective is to partially reduce the impact of increases on the final amount paid by drivers. This is an extraordinary mechanism created to respond to periods of strong instability in the energy market.
The detail that can increase the discount
The most relevant feature of this mechanism is the way it was designed. As explained by Joaquim Miranda Sarmento, cited by ECO, the discount applied to the tax works cumulatively.
This means that, if in a given week the price of diesel rises again, the difference could generate a new reinforcement in the discount applied to the ISP. In practice, each new increase can translate into a new fiscal adjustment that helps to soften the impact on the final price.
Gasoline can also enter the mechanism
The system is not limited to diesel only. The minister explained that the same logic could apply to gasoline if the price of this fuel exceeds certain high levels. The governor gave as an example a scenario in which gasoline records a new increase compared to the previous week. If this increase exceeds certain values, the discount may also be applied to that fuel.
Brussels has already been informed of the measure
The Government indicated that the European Commission was already aware of this mechanism and Joaquim Miranda Sarmento believes that Brussels should not raise objections. The minister highlighted that this is a temporary and extraordinary instrument, created to respond to the current energy crisis situation. Furthermore, the government official admitted that other European countries may adopt similar measures if the instability in the energy markets continues.
Strategic reserves can alleviate pressure
During this week’s international meetings, the possibility of using strategic oil reserves was also discussed. This hypothesis was defended by some international leaders as a way to alleviate pressure on prices.
Even so, the Minister of Finance warned that these reserves are limited and their main objective is to guarantee supply in the event of serious interruptions in energy supply.
Europe faces structural energy challenge
The current crisis reinforces a structural problem for the European Union. According to Joaquim Miranda Sarmento, Europe needs to continue reducing its dependence on oil and natural gas from geopolitically unstable regions. The government official also defended the need to accelerate structural reforms that strengthen the competitiveness of the European economy and increase the continent’s energy autonomy.
Impacts will depend on the evolution of the conflict
Despite the concerns, the minister considers that it is still too early to anticipate all the economic consequences of the current energy crisis. As he explained, the effects will depend mainly on the duration of the conflict in the Middle East and the possible extension of instability to other energy-producing countries.
If the situation continues, the impacts could be felt on economic growth and public accounts. Meanwhile, the Government remains open to the possibility of reinforcing the ISP discount if fuel prices continue to rise.
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