In yet another bid to push its green agenda, Brussels has sent a letter to Portugal calling for concrete actions to end the “bonus” being applied to the ISP tax on petroleum products.
If Europe gets its way, filling up a tank will start costing citizens another 10%, warns Jornal de Notícias.
The ISP “discount” began under the previous Socialist government after the Russian invasion of Ukraine caused fuel prices to skyrocket. Over time, the reductions have been whittled down, but Europe wants to see them completely eliminated.
The European Commission wrote a letter to this effect last year, which the government ‘ignored’.
This latest attempt stresses that the continuation of the discount “is not in line with recommendations of the European Council”: Portugal’s priority, according to Brussels, should be to “reduce global dependency on fossil fuels in the transport sector, particularly through the gradual elimination of subsidies to fossil fuels.”
Thus the government is being asked to “present an update on recent progress and plans” in this regard, with a view to “decisive action by Portugal to resolve these questions”.
Economist João Duque suggests there could be a way of keeping fuel prices where they are now, and eliminating the tax “discount”.
He told Rádio Renascença: “All that is needed is for the application of IVA (VAT) to be made on the base price of fuel, and there would be space to accommodate the increase that would come from the end of ISP “discount”.
But this is not a very likely solution, as the government prefers the way it currently calculates IVA.
For decades, Duque explains, Portuguese drivers have been paying “tax upon tax. In other words, the IVA is calculated after all the other levies and taxes are added together.
“We are paying 23% on the ISP and other taxes”, he told the station. “This is something, from a taxation point of view that makes absolutely no sense. We should not have to pay taxes on taxes that we have already paid.” But, the way things have been engineered to work is “much more advantageous in terms of IVA revenue for the state…”
Source material: Jornal de Notícias / Rádio Renascença
