The The government has already sent a bill to Parliament to implement a mechanism to reduce the ISP so that the bill payable by consumers is considered value-added tax as if it were at a rate of 13% and not 23%. This action will then replace the automated coupon, which expires at the end of this month and, according to the CEO’s calculations, is supposed to cost about 80 million euros per month. The expectation, “depending on the legislative process,” is that it will go into effect in May.
The explanations were provided this morning by the Secretary of State for Tax Affairs (SEAF), in a briefing to the Cabinet meeting last Friday, where the government approved a package with a set of measures to support families and businesses targeting avoid inflationary pressures, In the aftermath of the crisis caused by the conflict in Ukraine.
“What we will do is make sure that citizens when they go to the pump will pay for the fuel as if it was a 13% VAT and not 23%,” Mendes concluded, adding that “at the same time, we will maintain the weekly formula in which we can change the supplier Internet service to bring back exceptional gains to citizens ‘as a result of rising prices in international markets.
The idea, as the government has always said, is to lower the value-added tax on fuel from 23% to 13%, but while waiting for Brussels, which has to give permission, this was the solution that existed. He said that this would be a “transitional measure, valid until the end of each quarter and after that it will be re-evaluated,” noting that “any subsidy that includes fossil fuels is against what we have agreed within the scope of the Green Charter and we are only moving away in the scope of something exceptional as well.” . This “also requires great responsibility in use,” he cautioned.
the calculations made, There will be a decrease of 21.5 cents per liter in diesel, which corresponds to a 52% decrease in the increase recorded since October; and a decrease of 20.7 cents a liter in gasoline, which is a 74% decrease from the increase seen since October.
“We are helping mitigate the increase in fuel prices, but we have to be able to adapt, because the challenge of climate change is far from over.” And in the event that Brussels accepts a VAT cut, as expected, this will also be temporary, as Mendoncha Mendez warned: “These measures must be financially sustainable, but also environmentally.”
The measure should go to Parliament
The foreign minister made it clear that the margin the government still had to deal with the ISP was not enough to approve this new measure without going through Parliament.
The ISP consists of three components: a road service contribution and a carbon tax, which will remain the same, then the tax itself, and “the government can set the unit rate for each ordinance, between the minimum and maximum range and” Mendes explained that within this limit, as it no longer has to The government has room to move, it will request temporary permission to bring the minimum down to zero.”
That support would be more comprehensive than the automated voucher support, which it replaces, in so far as it would apply to businesses and families, SEAF said.