Portugal will reduce a section of VAT of electricity from 13% to 6%, will limit rent increases to 2% by 2023 and will support families with 50 euros per child, 125 euros per worker with incomes of up to 2,700 euros per month and extraordinary increases in pensions.
(See: Price indexation: what it is and how it would be affecting costs).
These are the main points of the 2.4 billion euro shock plan approved in council of ministers to combat the “brutal rise in inflation“, explained the prime minister ‘Portuguese’, the socialist António Costa, during the presentation of the new measures.
“Fighting inflation is a very difficult fight, measures are necessary to protect the purchasing power of families in the short term, but it also requires great prudence so as not to fuel the inflationary spiralCoast defended.
The Government will propose to Parliament, in which the Socialists have an absolute majority, a reduction in the VAT rate on electricity from 13% to 6%, with urgent processing so that it can be in force on October 1.
(See: Indexation and dollar also weigh on inflation).
Portugal currently rates VAT based on consumption for low-voltage contracts, with 13% for the first 100 kilowatt hours per month and 23% for the rest.
The prime minister explained that the rate of 13% will go to 6%, but consumption above 100 kilowatts will remain at 23%.
The Executive also approved an extraordinary payment of 125 euros (more than 550 thousand pesos) to each non-pensioner citizen with income of up to 2,700 euros per month and others 50 euros (more than 220 thousand pesos) for each dependent minor or young person up to 24 years of age, in this case regardless of the income level of each family.
For pensioners there will be a supplement of half a month of pension, paid in October, and extraordinary increases for 2023 that vary between 3.53% and 4.43%, depending on the value of the benefit.
With these measures,pensioners will see the purchasing power lost this year fully restored“, assured the head of the ‘Portuguese’ Government.
(See: Inflation would reach its peak in the fourth quarter).
By 2023, the increase in rentals for homes and commercial premises will be limited to a maximum of 2%, which will be offset by Tax improvements for owners.
The price of transport passes and train tickets will also be frozen for the next year.
The Prime Minister recalled that the Executive had already announced that it would allow gas consumers return to the regulated market, which represents an average saving of 10% on the bill for a family with two children, he estimated.
In addition, measures that were already in force for fuel prices were extended until the end of the year: the suspension of the increase in the carbon tax, the refund of the additional collection of VAT and the reduction of the tax on petroleum products.
(See: Europe readies rate hike to curb high inflation).
These measures represent a saving of 16 euros for a 50-liter gasoline tank and 14 for a diesel one, he said.
Inflation
istock
More than 4,000 million in 2022
This package of measures is added to the 1,682 million euros destined until September to combat inflation, which raises the total account until the end of the year to more than 4,000 million.
The ‘Portuguese’ Government still has to present business support measures.
The measures announced are intended to help families, “without increasing the inflationary spiral”, clarified Costa, who stated that “we are going to meet the objectives set for reducing the deficit and public debt“.
(See: The ‘two Argentinas’: consumption boom and increase in poor workers).
Inflation stood at 9% in August in Portugal, the highest levels in the last 30 years.
EFE
