The government expects diesel to fall by 17 cents per liter next week and gasoline to fall by 13 cents.
Although these reductions represent a loss in the collection of VAT, the Ministry of Finance indicates in a press release that it will not increase the oil tax.
“For next week, with a drop in fuel prices of around 17 cents per liter of diesel and 13 cents per liter of petrol, this should translate into a drop in VAT receipts which would result in an adjustment to ISP unit rates of 2.6 cents for diesel and 2 cents for gasolineaccording to the weekly mechanism of revision of the values of the unit rates”, explains the Ministry of Finance in a press release.
“In view of the uncertain circumstances of the economic development (…) the corresponding FAI update will not be carried out this week, now the temporary FAI discount“, reveals the cabinet of the ministry in the note sent to the editorial staff.
Thus, “the temporary FAI discount of 3.4 cents per liter of diesel and 3.7 cents per liter of petrol is maintained, the formula being applied again next week with the corresponding adjustments”.
With this formula, “the government seeks to guarantee the fiscal neutrality of the rise in fuel prices, by restoring the additional revenue collected on VAT thanks to the reduction of the ISP”, specifies the Ministry of Finance.
The application of this mechanism means that in a week when the prices of fuel sales to the public fall – as will be the case next week – the FAI rate increases in order to compensate for the reduction in VAT.
The price of the product itself, in which the state does not intervene, the FAI (lump sum) and the VAT, which is levied on the sum of these two and whose value increases when the base increases.
The decision of the government, announced today, not to carry out this compensation next week, results from the instability of the evolution of the market, also from the absence of response from Brussels, in particular on the request made by Portugal a temporary and exceptional rate reduction. VAT applicable to the sale of fuel.