Portugal, like any other member state of the European Union (EU), can reduce the VAT on gas and electricity to the minimum rate without having to ask permission from Brussels. The EU directive on this tax was amended in April, exempting countries from seeking approval from the VAT committee. However, it limits the application of the reduced rate to a list of 24 of the 29 eligible categories, which include electricity, gas and district cooling facilities.
The reduction in VAT from 23% to the minimum rate of 6% is one of the measures the government can take next Monday to mitigate the consequences for households of the escalation of inflation, namely the rise in energy prices. there is no legal impediment. However, the prime minister, António Costa, does not want to prejudge the kind of aid that the executive will approve in an extraordinary council of ministers and reserves the announcement of the aid package for Monday: “It is necessary to ensure that families are able to cope with this situation. and that’s what we’re working on. And Monday is almost the day after tomorrow.”
Companies will have to wait a few more days for support measures. Asked whether Portugal is considering cutting VAT on gas, as announced by Spain, Costa said only that “it makes sense to announce new measures only after the Council of European Energy Ministers on 9 September”. At the summit, the prime minister hopes that “the EU will adopt a series of measures, namely the reform of the electricity market”.
The official defended the need for “structural reform” and was optimistic about the outcome of the meeting of European energy ministers, as European Commission President Ursula von der Leyen has already recognized “the need to reform market” structure”. In the same vein, the President of the Republic, Marcelo Rebelo de Sousa, prefers concerted action by the entire community bloc: “I think that a series of measures should be considered in all countries at this time. level, otherwise inequalities in Europe will increase”.
According to tax law specialist João Espanha, “the government should reduce the VAT on electricity and gas to the minimum rate, in order to relieve the wallet of all Portuguese”. “It is incomprehensible that a government has collected budget surpluses and high tax revenues and not proceed with this kind of measures,” the expert told Dinheiro Vivo. In fact, according to the implementation of the July budget, the state reached a surplus of EUR 432 million, although it was lower than the surplus of EUR 1,113 million achieved the previous month.
As for the collection of taxes, whether they are direct, such as the IRS or IRC, or indirectly, such as VAT or the Petroleum Products Tax (ISP), the state treasury has already collected two billion euros more than expected for the whole year. . . The government expected to receive another three billion euros in 2022 compared to 2021, but in July tax revenues already exceeded five billion. Therefore, according to João Espanha, there is room to make progress with the reduction of VAT on energy. “Antonio Costa’s government did not turn the page on austerity, but skipped on austerity,” the inspector shoots, as “it was unable to lower the VAT on energy again”. It is recalled that the Troika ordered Portugal to increase the tax from the minimum rate (6%) to the maximum rate (23%).
In 2019 and 2020, António Costa’s previous governments, supported at the time by the device (PCP, BE and PEV), made surgical changes to the VAT on electricity and gas, with little impact on the household’s portfolio. At that time, the approval of Brussels was still necessary to change the tax rate.
In May 2019, the first Costa government made progress in reducing VAT from 23% to 6% on the fixed part, access to networks, for customers with contracted power up to 3.45 kVA. In the case of natural gas, the tax reduction applies to consumers with an annual consumption of no more than 10 thousand cubic meters.
In December 2020, the first year of the Covid-19 pandemic, the second Costa executive reduced the VAT on the entire electricity bill from 23% to 13%, but only for the first consumptions of 100 kWh per month or 150 kWh per month. for large families, provided that the contracted capacity does not exceed 6.9 kVA. At the time, the government stated that “about 5.2 million contracts will benefit from this decrease, equivalent to about 86% of low-voltage customers”.
Countries lower gas tax
Spain reduces to 5%
After reducing the VAT on electricity to 5% in July, Spanish Prime Minister Pedro Sánchez announced yesterday that he will reduce the VAT on gas from 21% to 5% from October. In principle, it will be a temporary measure, until the end of the year, but the Spanish government is available to extend it until 2023, “as long as the dire situation” of “rising and absurd” energy prices lasts, rightly Pedro Sánchez .
Germany eases to 7%
The German government also announced its decision in mid-August to temporarily lower the VAT on gas from 19% to 7%. The reduced rate will take effect from 1 October and should remain in effect at least until the end of March 2024. Celebrating the announcement, German Chancellor Olaf Scholz added that he hopes “businesses will replicate this drop at 100% on customers”.
Impact of support delays report
Due to the “potential impact” that the new package of support measures could have next year, the Ministry of Finance decided yesterday to postpone the transmission to the House of Representatives until 2023, in which the weight of the measures is estimated until 2023. according to a note from the ministry of Fernando Medina to which Dinheiro Vivo had access. The document should have been delivered on August 31, that is, yesterday. Last year, the table for 2022 indicated that the national budget must provide room for additional costs of around two billion euros.
Source: DN
