Get ready for some good news at the pump! Fuel prices are set to drop again next week, offering a much-needed break for drivers across Portugal. But here’s where it gets interesting: while diesel and petrol prices are expected to fall, the savings might not be as significant as they could have been. Why? The government has adjusted fuel taxation, reducing the discount on the Tax on Petroleum Derivatives (ISP), a move that has sparked debate among consumers and experts alike.
According to data from the ACP (Automóvel Club de Portugal), diesel—the most widely used fuel in the country—is expected to drop by two cents, while petrol will see a modest half-cent reduction. This means drivers will likely pay around €1.584 per litre for regular diesel and €1.659 per litre for 95 petrol, based on average pump prices released by the Directorate-General for Energy and Geology (DGEG). Next week marks the second consecutive week of price drops for diesel and the third for petrol, following this week’s reductions of 2.8 cents for diesel and 1.4 cents for petrol.
But here’s the part most people miss: these price drops could have been even more substantial. The Executive Branch anticipated a seven-cent drop in diesel and a 3.5-cent drop in petrol, but instead of passing the full savings to consumers, they adjusted the ISP. As a result, the ISP on petrol increased from 48.12 cents to 49.7 cents, and on diesel from 33.72 cents to 36.16 cents. This means drivers will now pay 65 cents in ISP and carbon tax per litre of petrol (up 1.6 cents) and 52.83 cents per litre of diesel (up 2.4 cents). And let’s not forget the additional 23% VAT on top of that.
Is this fair? Some argue that the government is capitalizing on falling fuel prices to boost tax revenue, while others believe it’s a necessary measure to balance the budget. What do you think? Should the full benefits of dropping fuel prices be passed to consumers, or is it reasonable for the government to adjust taxes in response to market fluctuations? Let us know in the comments below!
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