The legislative initiative was submitted to Parliament on 6 March, the same day it was approved electronically by the Council of Ministers, and includes a "request for priority and urgency" for the Assembly of the Republic to consider the amendment, intended to respond to the increase in fuel prices due to the war in the Middle East.

Margin to continue

The Government wants to have "sufficient margin to continue" applying the discount on the ISP through the return of additional VAT revenue and, for this, considers it "convenient to temporarily and exceptionally reduce the minimum limits of the unit rates of the ISP, ensuring the limits established by European legislation," the executive justifies in the explanatory memorandum of the initiative.

According to the proposal, the minimum unit rates for the ISP (Special Consumption Tax) on unleaded gasoline will fall to €199.89 per 1,000 litres, and those for diesel will decrease to €156.66.

Tax rates defined by Governments

The tax rates are defined by governments through decrees that set the values to be applied from a certain point in time, and these values must remain within the range defined by law in the Special Consumption Tax Code (CIEC). As this is a matter that alters a tax, Parliament must pronounce on the change, because setting the level of taxation is a prerogative of the Assembly of the Republic.

The text provides for a "temporary and exceptional alteration of the minimum limits of the unit rates of the tax on petroleum and energy products (ISP) established in articles 92, 94 and 95 of the IEC Code," says the initiative.

Reducing ISP

The change will allow the Government to “continue to periodically and temporarily reduce the ISP (Special Consumption Tax), through the return of additional VAT revenue resulting from the recent evolution of fuel prices, following the conflict in the Middle East,” as explained by the executive in the statement from the Council of Ministers issued when it approved the proposal.

The temporary reduction occurs when the increase in fuel prices exceeds ten cents compared to the week of March 2-6.

In the explanatory memorandum of the initiative, the government recalls that the discount was decided in the wake of the “extraordinary increase in fuel prices resulting from the impact of the geopolitical and military crisis in the Middle East on the prices of oil and its derivatives, in a context of high uncertainty,” given the “social and economic impact” that the aggravation brings “to families and businesses.”