Mariana Vieira da Silva led today's press conference. Photo: Miguel A. Lopes/ Lusa

Four ‘new measures’ introduced to combat rising prices

Portugal’s government seeks to “protect families and businesses without causing problems within inflationary spiral”

Minister Mariana Vieira da Silva, Portugal’s effective No. 2 in government, has presnted four measures today which “seek a focused response directed at the problem at issue (ie rapidly rising prices) able to protect businesses and families, without causing problems within the inflationary spiral”.

The measures involve ‘containing energy prices’, ‘supporting families and businesses’, ‘supporting agriculture and fisheries’ and ‘accelerating energetic transition’.

Taking them from the top: 

Containing energy prices

This will see the government drastically reduce ISP (its fuel tax) “equivalent to a reduction of IVA to 13%”, explained Ms Vieira da Silva (as it has become clear that getting Brussels’ approval for reducing IVA from 23% to 13% on fuel is an uphill struggle).

This ISP reduction will cost the government €80 million in lost revenue, the minister explained. It will be bolstered by the decision NOT to introduce a carbon tax (as envisaged) until June (this, Ms Vieira da Silva explained, lops another five cents off the price of a litre…)

The Autovoucher scheme – currently giving drivers €20 a month back on the fuel they have purchased – will be ending at the end of this month, added António Mendonça Mendes at this morning’s press conference – meaning the ISP reduction is not sue to come into effect until May.

Support for businesses and families

For energy intensive businesses in the social sector, this will come in the form of a discount of 30 cents per litre on fuel consumed, and a “flexibilisation of tax payments, and differing of social security contribution in the most vulnerable sectors”.

For families, the €60 lump sum payment previously announced for the hundreds of thousands receiving support with electricity bills has been extended to take in all families on minimum social benefits. These will also benefit from a €10 discount on the purchase of bottles of gas.

Support to agriculture and fisheries

IVA to be temporarily suspended for purchases of fertilizer and animal feed. 

ISP to be reduced on ‘agricultural diesel’ until the end of the year – meaning a reduction of at least 3.43 cents per litre.

€18.2 million to be ‘mobilised’ from national resources to mitigate increased costs with animal feed and fertilizers.

Acceleration of energetic transition

The plan here is to ‘reduce IVA on electrical equipment to the minimum rate’ as well as ‘streamlining the licensing of solar panels’ and  reinforcing decarbonisation goals with another €46 million aimed at the installation of solar panels by agricultural businesses. 

As to the elephant in the room, introduced last week by new minister for the economy António Costa Silva – threatening a windfall tax, particularly on energy companies, that find themselves with ‘excessive profits’ – Ms Vieira da Silva had no further information.

The idea – widely criticised for being floated without sufficient ‘planning’ – “was not discussed” by the Council of Ministers last Friday, she said. It is still a ‘work in progress’.

Mr Costa Silva added that the government is “studying all the possibilities that the European Commission has identified”, stressing “exceptional situations sometimes demand exceptional measures (…) We are conducting a thorough x-ray of all sectors of activity, and if there are unexpected, random profits, we will be attentive”, he said, “because the State does not have infinite resources”.

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