exhaust pipe
Photo: Andreas Lischka/Pixabay

PS axes controversial IUC vehicle circulation tax hike

Government accused of acting out of “fear” with election around the corner

The ruling Socialist Party (PS) has axed its highly controversial proposal to increase the IUC vehicle circulation tax by €25 every year for pre-July 2007 cars and motorbikes.

The announcement came in the form of a statement sent to newsrooms late last night and followed the words of Minister of Finance Fernando Medina, who during the speciality discussion of the 2024 State Budget had left the decision to scrap the proposed tax hike in the hands of his party.

Light vehicles are still in many cases the main means of transportation to the workplace or the nearest public transportation stop, especially outside of the country’s main cities and in low and medium-density areas, where the selection of public transportation is reduced and inadequate for the daily mobility needs,” PS said in the statement.

“In these cases, in which cars are an absolute necessity, there is also the fact that many citizens do not have the financial means to replace their vehicle with a newer one. Thus, we consider it important as a matter of social justice and protection of citizens with more economic vulnerability to rectify the State Budget proposal,” the socialists add.

Political scientist Bruno Costa has given his take on the government’s reasons for cutting the proposed tax hike.

“The main goal (of PS) is the electoral campaign for March 2024, and knowing the reaction that this measure caused, obviously PS realised that it would be harmful and affect the support of the lower middle-class,” he said on SIC Notícias.

The Portuguese Automobile Club (ACP) has also highlighted the “fear” that it believes prompted the government’s decision to axe the tax hike.

“As expected, with elections scheduled, (PS) got scared and took a step back, although I think they would have with the public outrage, but now with elections at their door, they got scared,” ACP president Carlos Barbosa told Lusa news agency.

Barbosa also targeted Fernando Medina, who continued to” joke” that the increase was “only €25”.

It’s an offence to the Portuguese people,” he said. “They knew they would be punished in the election so they backtracked.”

A petition against the IUC tax hike became the most signed ever in Portuguese history, amassing (at the time of writing) over 403,000 signatures.

By Michael Bruxo

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