Energy has dominated the public debate. High gas prices caused inflation to skyrocket, resulting in high bills for businesses and households’ wallets. Portugal, in line with its European counterparts, has provided some support to mitigate the impact. But are they enough? What measures are expected in the National Budget (OE) for 2023? These are some of the topics that will be discussed this Tuesday at the conference promoted by Dinheiro Vivo, in the CCB, in Lisbon, dedicated to the theme: “Covid, war, inflation: how to adjust taxes in the OE2023” .
Raising the curtain a bit, some experts reveal that introducing a tax on excessive profits by oil companies, withdrawing the road maintenance fee or applying tax incentives to those investing in the energy transition could be some of the measures. which the government will include in the OE before 2023. And they warn of the need to include aid to ease household electricity and gas bills, namely through the general cut in VAT to 6%.
As for the much-discussed tax on profits that fell from the sky (windfall tax) which the European Union is talking about, Francisco Guedes, Coordinator of the Tax Office of SRS Advogados, warns that, in the future, “it could mean that the current extraordinary contribution to the energy sector (CESE) is withdrawn, in order to avoid undue punishment of the sector and negative impacts on families and businesses”.
The controversial energy sector tax, introduced in Portugal in 2013 after Spain began levying a special 7% tax on electricity producers, has been challenged in court by companies in the sector since its inception. And it also applies to some renewable energy producers. The Association of Clean Energy Producers (APREN) has called for a change in this situation. And this year it reinforces the request to CESE to stop taxing all renewable energy sources, not least because the “bill” of the current Iberian mechanism, which puts a brake on gas prices for electricity production, is paid for by renewable energy sources and some consumers, defended Pedro Amaral Jorge, president of APREN.
Another of the expected measures, according to the coordinator of the tax administration of SRS Advogados, is the “withdrawal of the contribution from the Roadside Assistance (recently assessed as a violation of European law) and the announced suspension of the update of the CO2 tax on fuels “. Francisco Castro Guedes also points to the possible return of the “AUTOvoucher” and “IVAucher”, aid that provided respectively discounts on fuel and a financial advantage in restaurants, accommodation, cultural activities or when purchasing school books.
VAT reduction
Luis Marques, country tax leader of EY Portugal, recalls that, given the current energy crisis, the government has already taken some measures, such as easing the fuel ISP and, more recently, under the family support package, the application of the reduced VAT rate to electricity consumption for certain consumer profiles. However, the advisor’s specialist believes that “perhaps the government should be more ambitious as other EU countries have taken bolder measures”. Which? “From the outset, the universal application of the reduced VAT rate of 6% to gas and electricity consumption in a transversal way. It would certainly be an interesting relief for families,” he added. In addition, Luís Marques points out that this measure is neutral for businesses, “since a VAT is a tax that can be recovered in the context of business activities, the adoption of this measure would have no major impact”.
A view shared by the other experts heard by Dinheiro Vivo. The President of the Association Representing Energy Traders (ACEMEL) has no doubts that “in this energy crisis, the two agents most affected in the sector’s value chain were consumers and independent traders (those who are not vertical or have significant have production value)”. In that sense, Ricardo Nunes expects that economic and fiscal measures will mainly affect these agents. “Like what has been done across Europe, tax cuts and specific financial support should be considered if we are to maintain a dynamic, innovative sector sensitive to energy transition policies.”
Still on a fiscal level, the EY specialist believes that the Executive will have to look for other measures, such as financial incentives, support lines and perhaps tax incentives for companies that invest heavily in energy transition plans, such as by granting a tax credit in the form of deduction for the IRC collection. “This is a critical issue, as several companies in Portugal are under a lot of pressure with this issue, as energy bills will rise by more than 300% in several cases,” warns Luís Marques.
Looking to the future, ACEMEL’s president says that “there is not one solution” to the crisis. “It’s almost like squaring the circle.” But it suggests that governments “should continue to invest in renewable technologies, without putting too much of a disadvantage on all those non-renewable technologies we still need.” [gás]and try to realize the interconnections of the Iberian Peninsula, as this reinforcement will give us access to a to blend more diversified and more financially sustainable energy source”.
Regarding the impact of this current crisis, which started even before the war, on energy transition plans, the EY official recalls that “history teaches us that challenging times like the one we live in are often catalysts for change”. While the energy crisis has prompted Europe to rethink the shutdown of coal-fired power plants and import natural gas from other countries, Luís Marques believes these measures are punctual, revealing that “what we are seeing is actually an acceleration of investment in abundant renewables.” energy sources such as wind and solar, so that, as in the past, decisive steps are taken towards greater energy independence, which aims to become decarbonised today”.
Source: DN
