Government reduces fuel tax until June: what changes in fuel prices?

The Government has approved a new proposal to temporarily reduce the Tax on Petroleum and Energy Products (ISP), aiming to curb the rise in fuel prices. The measure is expected to remain in force until the end of June and comes at a time when energy costs continue to be pressured by the international context.

But what does this actually mean for drivers?

A tax relief to contain prices

The proposal includes lowering the minimum ISP limits applied to petrol and diesel. In practice, this allows the Government to continue applying discounts through the reimbursement of additional VAT revenue, helping to mitigate the impact of recent fuel price increases.

According to the proposal, the new limits are set at €199.89 per 1,000 litres for unleaded petrol and €156.66 per 1,000 litres for diesel. This adjustment creates room to maintain the current discounts in place.

Why is this measure being introduced now?

The decision comes as a direct response to rising fuel prices, driven by factors such as geopolitical instability in the Middle East and volatility in international markets.

Since early March, the price of petrol (95) has increased by around 20 cents per litre, while diesel has risen by approximately 44 cents. This context has led the Government to extend the existing tax relief mechanisms.

How does this ISP reduction work?

The model allows for weekly adjustments to the ISP, ensuring that whenever fuel prices rise beyond certain thresholds, the tax can be reduced to offset that increase.

In practical terms, whenever prices exceed specific levels (for example, increases above 10 cents), the Government can intervene to prevent a sharper impact on consumers.

The approved regulation sets the temporary and extraordinary ISP discount at 8.34 cents per litre for petrol and 4.58 cents per litre for diesel.

How long will it last? What to expect in the coming months?

The proposal will now be reviewed by Parliament, but it is expected that the reduction will remain in force until June 30.

The goal is clear: to provide predictability for consumers and businesses during a period of uncertainty, while maintaining some control over fuel price developments.

Although this measure helps to soften price increases, fuel prices will continue to depend on external factors such as oil prices and the global geopolitical situation.

Still, this ISP reduction gives the Government an active tool to respond quickly to market fluctuations.

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Source: Contas Poupança; SIC Notícias