The “tricks” hidden in government’s €2.4 billion support package
Tasked with explaining the government's measures in more detail this morning, finance minister Fernando Medina said they programme is “effective” in its response to families, and "vast"

The “tricks” hidden in government’s €2.4 billion support package

Opposition parties expose ‘the fraud’, ‘the illusion’: President says measures ‘below expectations’

This morning saw more Socialist public relations on the €2.4 billion package of support to help families through the cost of living crisis.

But the ‘tricks’ in the small print, say opposition parties, are becoming ever more clear – perhaps the least attractive being the contention that IVA on electricity is reducing to 6%. It is a statement that belies the reality: IVA where it is charged at 13% will indeed be reduced to 6%. But where it is charged at 23%, the percentage stays.

Expresso explains this morning the frustrations voiced by opposition party spokespeople last night.

Basically, running the fridge may end up slightly cheaper, but when it comes to heating the house through winter “not really”, says the paper.

The government’s intervention is focused on reducing IVA to 6% for the first 100 kWH per month of consumption. This level of usage will run fridges, televisions, the coffee machine, for example –  but it won’t cover much more than that, Expresso warns.

Just one 2000 watt oil heater, for example, run for four hours per day, every day, “can consume 240 kWH per month”.

Cooking with electricity? “One ceramic hob used for an hour a day will consume 40.5 kWH per month”.

And when it comes to the hundreds of thousands of families reliant on gas bottles (not piped gas) there has been no mention whatsoever of any limits on prices that might be charged.

Sure, updates on this point may come on Thursday, when environment minister Duarte Cordeiro is expected to outline further measures to do with energy supplies – but this is just another moot point today.

Further concerns will be weighing on all households with piped gas. The government has stressed that it will allow domestic clients and small businesses to move from the liberalised market to the regulated market – estimating this way they could save up to 70% on bills which will start coming in in October (when gas prices are expected to increase by as much as 150%). But there is still no certainty that the regulated market will have the gas supplies it needs to service this influx.

As to pensions, controversy is raging this morning over the measures announced (the so-called one-off bonus in October where almost all pensioners will receive another 50% of their monthly payment).

According to opposition parties, and explained succinctly by Mariana Mortágua of Bloco de Esquerda, this ‘trick’ is a way of the government circumventing legal requirements to pay the country’s pensioners considerably more.

“The announcement made by António Costa is not an increase in your pension”, she advised pensioners last night. “The law for updating pensions was unfrozen during the last legislature, meaning that in 2023, as a result of the combination of an increasing GDP, economic growth and inflation, there was to be a very generous updating of pensions. What António Costa is saying to pensioners is that he will be revising this law and bringing the increase down…”

In Brazil today for the commemorations of the country’s 200 years of independence, President Marcelo has admitted that he “would like to have seen more” given to families – a more ambitious programme. But he acknowledged the measures have been “well thought out” in order not to compromise the country’s very considerable debt.

What Marcelo has stressed is that if “this continues, they will have to loosen the purse strings” (‘this’ being inflation, and ‘they’ being the government).

natasha.donn@portugalresident.com