In an extraordinary display of bad timing, Portugal’s coalition government has announced a new price hike at the pumps.
Just as the global price of crude is on a new slide, the Portuguese will be denied any of the knock-in benefits – in fact, businesses will be hammered all the more.
National tabloid Correio da Manhã puts it in a nutshell: “The Minister of Finance says that ‘many families will have more spending power in 2015’ but for now what Portuguese people can expect is an increase in the price of fuel with the inevitable consequences in all economic activity.
“We are talking of a rise of two cents per litre in the road service contribution, which passes to 8.7 cents for a litre of petrol and to 11.1 cents for a litre of diesel.”
The road service contribution was created in 2007 as a way of making drivers pay for the use of national roads. It has helped make Portugal’s fuel among the most expensive in Europe.
This latest increase is just one of the “new consolidation measures” revealed in the proposed State Budget for 2015 – which many had hoped would bring relief to the amount of IRS (income tax) levied since the era of austerity. It hasn’t.
CM explains that this new budget – introducing over another billion euros worth of austerity measures (bottom line figure: €1.249 billion) – has been devised so that any IRS relief is dependent on the amount of taxes received during 2015.
In other words, relief will not come before 2016.
“The decision to reimburse IRS depends on our behaviour,” Maria Luís Albuquerque reiterated. “If we pay the taxes we are meant to pay, we will all pay less.”
Calling the document a “realistic budget”, Prime Minister Passos Coelho told a meeting of businessmen in Cascais yesterday that it was “not created to pander to the electorate ahead of next year’s national elections”.
Other unpopular increases include another 2.9% on the price of beer and a new tax on electronic cigarettes.
Pensioners and public sector workers will receive a certain amount of relief (the extraordinary pension contribution for lowest end pension has been scrapped, and the 20% cut to civil service salaries has been replaced) and there is relief too for businesses paying IRC, but as political thinkers and commentators have been quick to point out, this new State Budget is more of the same.
“This proposition … shows enormous fragilities because it has been based on an excessively optimistic macroeconomic scenario,” warned former economy minister Vieira da Silva, while the PCP’s Paulo Sá, a former lecturer at the University of the Algarve, described the budget as an “ambush”.
Commenting on the fact that the government had first tried to turn all its citizens into tax inspectors (by creating the Lucky Receipts scheme) and is now going further with its “Lucky Budget”, promising rewards if enough taxes are paid, CM’s deputy director Carlos Rodrigues writes: “Now we are all budget controllers. How much we will pay appears to be up to us. It is very possibly the epitaph of a moribund government.”
