Diesel is down 17 cents, and gasoline is down 13 cents next week

Next week the price of a liter of diesel is expected to decrease by 17 cents and the price of gasoline by 13 cents, according to the government’s view, which, despite the decline, will maintain low ISP rates.

The Ministry of Finance said in a statement issued today that during the next week, “fuel prices are expected to decrease in the range of 17 cents per liter of diesel and 13 cents per liter of gasoline.”

This development in the liter price “should lead to a decrease in VAT revenue, which could lead to an adjustment of ISP unit rates by 2.6 cents in the case of diesel and 2 cents in the case of gasoline,” taking into account the calculation of the weekly revision of unit price values, which entered It took effect last week.

However, given the “uncertainty about the development of the situation”, as well as the expectation of coordinated responses at the European level, the government decided this week that “the corresponding ISP will not be updated”. [Imposto sobre Produtos Petrolíferos]”.

This way, over the next week, the ISP’s temporary discount of 3.4 cents per liter for diesel will be maintained (a figure that includes the ISP’s 2.4 cents reduction resulting from the price hike of 16 cents per liter earlier this week.) at 1 per cent in effect since October) and 3.7 cents per liter of gasoline (the 1.7 per cent cutback was implemented at the ISP earlier this week and the 2 per cent cut in effect since October).

Next week, the finance ministry says, the formula will be applied “with corresponding adjustments” again.

Earlier this week, for the first time, a weekly mechanism for reviewing ISP rate values ​​was implemented, which specifies that this tax must be reduced in order to neutralize the increase in VAT revenue generated by the increase in fuel prices.

With this formula, “the government seeks to ensure fiscal neutrality for the rise in fuel prices, and to return the additional revenue collected from the value-added tax through the reduction of the Internet service provider,” says the Ministry of Finance.

Implementing this mechanism means that in the week when the price of fuel sales to the public falls – as will happen next week – the ISP rate rises to offset the drop in VAT.

The price of the product itself, in which the government does not interfere, ISP (fixed amount) and VAT, which are levied on the sum of these two amounts and whose value increases when the base rises.

The government’s decision, which it announced today, not to provide this compensation next week, is caused by the instability of market development, and also by the lack of response from Brussels, and specifically regarding the request made by Portugal for a temporary and exceptional cut in the price. Value added tax applicable to the sale of fuel.