Portugal implements €1.3 billion fuel support package

The Portuguese government has implemented a support package worth an estimated €1.3 billion to mitigate rising fuel costs, primarily through an extraordinary reduction in the Tax on Petroleum Products (ISP). This mechanism provides a discount of approximately 23 cents per liter on petrol and diesel. The government utilizes additional VAT revenue generated by higher pump prices to fund these ISP reductions.

Environment and Energy Minister Maria da Graça Carvalho defended the policy in Parliament, stating that Portugal will not implement broader fuel tax cuts similar to those seen in Spain. The government maintains that fuel tax revenue is essential for funding critical public services, including the National Health Service (SNS) and education. Instead of broad subsidies, the state is targeting aid toward specific sectors such as agriculture, fisheries, freight transport, taxis, and firefighters.

The decision follows public unrest, including road blockades near Sines, where demonstrators demanded more significant tax cuts and the removal of the carbon tax. While the government emphasizes its fiscal offset strategy, opposition leaders argue the current structure still places a disproportionate burden on families.