The tax reduction will have a direct effect on the price of petrol and diesel, starting on 23 March. The measure is taken due to pressure on fuel prices caused by the conflict in the Middle East, in order to mitigate the increases expected in the coming days, as reported by The Portugal News.

According to data from the Ministry of Finance, the price of fuels will be subject to “an extraordinary and temporary discount on the ISP (Tax on Petroleum Products) on road diesel in the amount of 2.6 cents per litre, and on unleaded petrol in the amount of 1.4 cents per litre.”

In the same statement, the Ministry of Finance reveals that the measure will have a special impact on the final price consumers pay, due to the VAT incidence. Thus, “the real discount felt by taxpayers will be 3.2 cents per litre in the case of road diesel and 1.7 cents per litre in unleaded petrol.”

The new reduction will be applied in addition to the reduction previously implemented by the Government, which was reported by The Portugal News.

The Ministry of Finance also reveals that, “in the absence of this reduction, (…) the price of road diesel would rise by 15.5 cents per litre and unleaded petrol would increase by 9.1 cents per litre”.

With the application of the new reduction, in addition to the previous reduction, the Ministry of Finance reveals that “next week, the total accumulated savings for the Portuguese will be 9.4 cents per litre for road diesel and 5.1 cents per litre for unleaded petrol”, using as a reference the prices practised between 2 and 6 March.