Law involves tax on occupation of subsoil
Portugal’s new centre right government is to review the current law underpinning the Subsoil Occupation Tax (TOS).
According to Lusa, this tax is “supposed to be paid by gas distributors but many councils continue to pass the charge on to consumers”.
In a statement, the Ministry of the Environment and Energy has said that it is “essential to review” changes introduced with the approval of the 2017 State Budget, which it believes “have generated distortions that penalise consumers, companies and municipalities.”
The tax was created in 2006 and initially charged by municipalities to natural gas distributors for the use and exploitation of assets in the municipal public and private domain, such as underground gas networks.
However, since 2008 gas distributors have been authorised to pass on this cost on to consumers via bills for natural gas supplied.
Subsequently, the law that approved the State Budget for 2017 stipulated that “the municipal right of way fee and the municipal subsoil occupation fee are paid by the infrastructure operating companies and cannot be reflected in the consumer bill.”
For this law to be enforced, “previous governments should have made legislative changes to operationalise the provisions of the law, ensuring that no inequities were generated” – but this was not done.
“For seven years, the problem remained unresolved, resulting in an increase in complaints and litigation between the agents involved in the process,” said the ministry in released yesterday (Sunday).
The TOS legal rules “will be reviewed to ensure due proportionality in its application,” the ministry announced, adding that it is evaluating the matter, taking into account “the perspectives of consumers, municipalities and infrastructure operators, and also taking into account the position of the regulator (ERSE) and court rulings that have been handed down.”
In 2023, Portugal’s Supreme Administrative Court ruled that the levy was illegal, based on a clause in the 2017 State Budget – but this ruling remains unenforced and the levy continues to be charged.
Some municipalities raised the fee again in January this year, with Barreiro, Cartaxo, Évora, Cascais and Arruda dos Vinhos charging the highest amount, according to ERSE data consulted by Lusa.
Consumer rights association DECO PROteste recently pointed out “incomprehensible discrepancies” – giving the most egregious example of Barreiro where, in a scenario of monthly consumption of 200 kWh (equivalent to 17 cubic metres/month), consumers are charged €10.64, compared to €1.14 in the neighbouring municipality of Palmela, and €2.77 in the municipality of Seixal, in the same region.
Some municipalities (Figueira da Foz and Barcelos, for example), do not currently levy the TOS, while Esposende has a negative rate.
During the debate on the State Budget for 2024, the then governing Socialist Party (PS) rejected a proposed amendment from the Communist Party (PCP) that would have determined that the TOS should not be passed on to natural gas consumers. The proposal was rejected by the PS and the Liberal Initiative (IL), with the then main opposition PSD (now part of government) abstaining.
Source material: LUSA
