Fuel, VAT and inflation “is not going well”: The view of the minister

O minister for Economic Affairs, Manuel Castro Almeida, was in Parliament on Wednesday and answered several of the Members' questions, having shared his vision on the increase in fuel prices, inflation and even VAT reduction. What did you say?

Portuguese are passing “difficulties”

The Minister for Economic Affairs and Territorial Cohesion considered that inflation is not going well and admitted that the portuguese are experiencing difficulties because of the extraordinary increase in fuels.

“Inflation is not going well, it should be falling and rising”, said the ruler, who spoke at the regimental hearing in the parliamentary committee on Economics and Territorial Cohesion.

Considered the question of fuels “a delicate point”, admitting that “the portuguese are experiencing difficulties because of this extraordinary increase in the cost of fuels“.

“ What the government is doing is ensuring that the government does not gain from the effects of the war,” Castro Almeida said, saying that “the effects of the war raise the price of gasoline, if the price of gasoline goes up, VAT revenue is higher and the government is turning the increase in VAT revenue into discounts in the ISP to counteract the increase in VAT revenue, so that there is no increase in tax revenue at the expense of the war.”.

Now, “this is the work of neutralisation that the government is doing”.

Besides, “the government has decided to grant special support” for agricultural diesel, which benefits farmers, and indirectly to prevent the increase in agricultural gas oil from then reflecting on supermarket shelves, the increase in agricultural products, continued.

It is also announced that the government is preparing “and will shortly adopt measures to support professional transporters as well as firemen to support their work“.

In short, the government's approach is not to take general measures for the whole population, but to take measures aimed at sectors that are most affected.

VAT reduction? “Very controversial material”

The ruler also considered that vAT reduction is a controversial issue and there is a risk to reduce the increase in revenue of the trade sector rather than in the costs of families.

“What I can tell you on this subject is that VAT reduction is a very controversial matter and I am sure that Mr [Jorge Pinto, from the Free] will also agree that it does not or runs the serious risk of any VAT reduction having much more effect on the State coffers than on the welfare of families”, said Castro Almeida.

In other words, “a vAT reduction has a serious risk of resulting in an increase in revenue from the trade sector and of not having an impact on final costs” for families, the ruler continued.

Therefore, “we run the risk of running out of financial instruments to help those who really need it.”.

And he insisted: “VAT reduction has an objective risk that is to benefit those who consume the most and are the most favored classes and not the least favored classes that would be less favored by this measure.”.

For this reason, “I am not convinced that this is an appropriate way to solve the problem of price worsening”.

The Free also questioned the Minister about a possible setting of profit margins.

In response, Castro Almeira stressed this was a “delicate subject”.

“ Only in very abnormal conditions can this be done. Only under very abnormal conditions, only under conditions of, of course, abuse of dominant position by companies, can a government think of such a measure”, he argued.

“ I would only admit such a rule under very exceptional conditions that I do not think are verified at this moment ", finished Castro Almeida.