VAT cut on electricity would cost €774M and is “illegal”

in News · 07-02-2020 01:00:00 · 2 Comments

Portugal’s secretary of state for parliamentary affairs said that if the PSD’s proposal to reduce VAT on electricity from 23 percent to 6 percent is approved, it will cost €774 million a year.

This estimate was put forward by Duarte Cordeiro in his speech at the PS Parliamentary Days in Setúbal, where he also reinforced the thesis that this proposal by the social democrats is illegal and suggested that the Communists could reject the measures to compensate for the reduction in VAT on electricity proposed by the PSD.
“Since it is not possible to discriminate against domestic consumption - we seriously believe that it will not be possible - this PSD proposal represents an impact as of 1 July of around €334 million. In a full year, it would represent around €774 million,” he said.
According to Cordeiro, although the reduction of VAT on electricity is not included in the government’s programme, it has been seeking a “balanced solution” from Brussels for the implementation of this measure to reduce VAT on electricity.
“But the PSD’s proposal not only ignores that path and that commitment but seeks a VAT reduction with enormous budgetary impact. Besides being illegal, since it applies different rates to different types of consumption (domestic and non-domestic), it is based on the assumption that it will be compensated by cuts for which we do not believe there is a majority for its approval,” he said, here in a notice to the Left Bloc and PCP.
Cordeiro then challenged the PSD to clarify “what it will do if the compensation it proposes” to reduce VAT on electricity “is not approved.

“Otherwise, this proposal does not have the balance and its approval represents (in the PSD’s own words) an irresponsibility”, considered the member of the government.
For the phase of budget discussion, according to data from the secretary of state for parliamentary affairs, about 130 proposals for amendments to the proposal of the government have already been approved in general.
“It is clear that we must be selective in what we can accept at the risk of disfiguring the budget, calling into question the government’s programme and the sustainability of the country’s budget balance,” he added.
Meanwhile, Portugal’s finance minister has warned that the proposal to reduce VAT on electricity is illegal, in violation of Portuguese and European legislation.
“The VAT proposal is illegal because it does not comply with national and community legislation,” Centeno said in a reference to the fact that the Social Democrats’ proposal to amend the 2020 budget establishes a differentiation between the VAT on electricity for domestic consumption and VAT on electricity for industrial consumption.
In his speech, he also said that the PSD proposal was incompatible with budgetary balance and, in this context, suggested that the social democrats may want a cut in spending in the National Health Service (SNS).
To finance the reduction of VAT on electricity, the PSD said it presents compensation measures, but those measures are not credible, said Mário Centeno.
According to him, “if the PSD’s proposals were to be taken seriously, for example, the issue of cuts in intermediate consumption, it would inevitably mean a cut in the funds that are in the budget for the country’s Health Service.


Since when and in which country is it illegal to reduce taxes (in this case the VAT) that affect the cost of the electricity sold to the people? Portuguese pay one of the highest price per kWh of the power they use!

By Tony Fernandes from Other on 08-02-2020 11:09

Its time people realized what they are paying for, vat on electricity is a misnomer, it doesn't vary in value, its just electricity, the distribution quality doesn't vary, its on or off, that could be questioned, given all outage's we suffer in pt. Reduces to 6% would help economy by more usage, lack of foresight and greed is pt. Gvt. Specially, sigh!

By John from Porto on 08-02-2020 05:10
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