Tax reduction, new credit line or increased support to pay the gas bill. These are some of the measures in yesterday’s government-approved €1.4 billion package to help businesses cope with rising energy costs and other economic difficulties due to high inflation. Business associations applaud the initiative. They say the measures are moving in the right direction, but they are late.
The first measure presented by the Minister of Economy and Sea was to strengthen support for gas-intensive industries. The package provides for two modalities: the increase of the aid per company from the current EUR 400,000 to EUR 500,000 per year, and the extension of the aid rate from 30% to 40% of the natural gas costs compared to the previous year, “provided there is more than double the expenditure on energy,” said Minister António Costa Silva at the press conference. These measures were also extended to the agri-food industry and retroactively.
Still on the gas-intensive industries front, the government has announced it will grant a grant of up to five million euros to companies at risk of closing due to the rise in natural gas costs, which have reached historic highs. However, this aid will be for certain situations and is still awaiting approval from Brussels. In total, the share going to this sector will cost 235 million.
“Unfortunately, fiscal measures appear to be weak and therefore do not meet the needs. The package of measures does not affect the VAT on electricity, gas and fuels, as it would be important.” CIP
One of the criticisms of the CIP – Confederação Empresarial de Portugal is precisely that this subsidy on the energy bill is “applied only to industries that make heavy use of gas and not electricity”. Therefore, “CIP proposes to reconsider this measure immediately”.
The government will also launch a new credit line to support liquidity and the treasury, amounting to 600 million euros. Access to this line of funding, which will be managed through Banco de Fomento, will cover all sectors and should be operational in the first half of October. The Portuguese Business Association (AEP) is particularly critical of this measure, pointing out the “disadvantage of increasing corporate indebtedness” in a context of rising interest rates, claimed Luís Miguel Ribeiro. The president of the association recalled that the structural capitalization measures announced by the government would not take place until 2023.
“The minister had said it would be possible to go up to two million euros to support companies, but we have to wait and see what the access conditions will be.” Mario Jorge Machado, ATP
The CIP expressed the same concern. He believes the line of credit “could be useful”, but warns that “as a rule, companies don’t need more debt”. “At a time when the rate hike seems to have only just begun, the debt burden, despite more favorable terms, must be handled with extreme caution,” he warned in a statement.
The package approved on Thursday in the Council of Ministers also provides for a tranche of 290 million euros to accelerate efficiency and energy transition in companies, promote the decarbonisation of industry, the production of renewable energy and the optimization of energy consumption.
Rail freight operators were also part of this package and benefited from a total of €15 million in direct subsidies from October. For diesel locomotives € 2.64 per kilometer is paid and for electric traction locomotives € 2.11 per kilometer. This support is intended to find a solution to a situation of injustice in road freight transport, the minister emphasized.
tax cuts
In fiscal terms, the plan provides for a 20% increase in corporate tax on electricity and natural gas, which means that less tax has to be paid. This measure, which will take effect immediately, will also apply to spending on “fertilizers, animal feed and other foodstuffs” for agricultural activities, the economy minister assured.
The temporary suspension of the ISP and the carbon tax on natural gas used for the production of electricity and cogeneration is also foreseen. The extraordinary professional diesel mechanism and the temporary reduction of the ISP applicable to agricultural diesel will also be extended until the end of the year.
For the associations, the fiscal measures appear to be “weak and thus not meeting needs. The package of measures does not affect the VAT on electricity, gas and fuels, as it would be important to do”, emphasizes the CIP.
“We are pleased that after much urging from the Ministries of Agriculture and Economy, our claims have finally been rightly accepted.” Jorge Henriques, FIPA President
A view shared by the AEP, which also regrets that it has not yet made progress “to lower taxes on labour”. In this area, the Minister of Economic Affairs ruled out the possibility of returning to the layoffs, having only announced a support of 100 million euros to avoid layoffs in companies. “The simplified dismissal is not suitable for the current situation,” said António Costa Silva. “We are going to conduct a training program to keep workers in the companies,” the minister announced. A position not shared by the AEP, which, despite seeing training and qualification as “positive”, emphasizes that this “should not prevent the existence of other measures, such as dismissal”. Despite “welcoming” all measures that “help to mitigate the impact of the current situation on business activity”, Luís Miguel Ribeiro believes they are “manifestly insufficient and late”.
“The announced timing for some measures is not in line with the need and urgency of their immediate implementation.” Luis Miguel Ribeiro, AEP
The CIP emphasizes that the package presented is “going in the right direction”, but warns that the measures, which are still “inadequate”, must be implemented “immediately”. Regarding the extension until June 2023 of the extraordinary revision of public procurement prices, also announced on Thursday, the confederation draws attention that this measure “may not only apply to public works, but should have a broader scope”.
This support package for companies has been discussed between the government and Brussels in recent weeks and follows the recently presented family help plan of 2400 million euros.
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Source: DN
