Government announces fuel discounts and housing incentives

After the Council of Ministers meeting he chaired, Luís Montenegro addressed the country to announce measures targeting sectors in crisis, such as fuel for professional use and housing.

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The Portuguese prime minister appeared proud, saying that Portugal is “an economic and financial benchmark in Europe” and that it is therefore “in the Champions League of Europe’s economic and financial stability”.

As evidence of this, he began by stressing that “Portugal was the first European country to take measures in response to rising fuel prices”, he said.

“In the very first week, we introduced a cut in the ISP fuel tax whenever fuel prices rise by more than 10 cents,” he recalled, noting that together with the discount already in force since last year, the current reduction “is around 20 cents per litre in the case of diesel and around 16 cents per litre for petrol.”

Montenegro went on to announce new measures, this time aimed at the professional sector, with the long-awaited VAT cut left off the table.

The Council of Ministers therefore decided that, between 1 April and 30 June, there will be “an extraordinary mechanism for professional diesel, consisting of additional support of 10 cents per litre, on top of what I have already mentioned, up to 15,000 litres over these three months“, for diesel used by goods vehicles “weighing more than 35 tonnes and buses with more than 22 passenger seats”.

Extraordinary support was also announced for the agriculture, forestry and fisheries sectors, to be paid through IFAP (Instituto de Financiamento da Agricultura e Pescas, I.P.), also “amounting to an additional 10 cents per litre on dyed diesel”, he continued.

Montenegro clarified that these two forms of support will apply in weeks when the average price is more than 10 cents above the level recorded in the week of 2 to 6 March, that is, before the first increase.

It was also decided to grant extraordinary support to volunteer firefighters’ associations, taxi companies and private social solidarity institutions.

In total, the measures envisaged amount to around 150 million euros a month in fuel-related support.

Luís Montenegro stressed that the government aims to soften the impact on the lives of the Portuguese people while preserving the State’s financial capacity to intervene and adjust individual measures. “Not to unbalance the public accounts so that we do not throw away our collective effort of years,” he said.

Housing sector

The Council of Ministers also approved other structural, strategic instruments for transformation and reform.

Luís Montenegro highlighted three in the area of housing: “the first focused on taxation, promoting incentives for investment and for making homes available by reducing tax on rentals at moderate levels, implementing the legislative authorisation passed by Parliament, applying the reduced VAT rate to building work on primary permanent residences, or on homes for rent (at moderate rents), including self-build,” he announced.

And also “exemption from capital gains tax on the sale of homes when the proceeds are used to buy housing to be let at moderate rents,” he continued.

The government believes that, in the medium term, these measures can increase supply on both the rental and ownership markets and thus help to moderate prices.

As a second measure, he also highlighted the ” revision of the legal framework for urbanisation and building” , which still has to be promulgated by the President of the Republic.

The aim of this measure is to have clearer rules, “more predictable procedures and shorter, more agile timeframes”, in other words “less time means more homes available to the Portuguese, lower costs for those who build and, with that, better prospects for those who buy or rent,” he said.

Thirdly, there is the creation of a special procedure for the sale of undivided real estate. The measure is intended to break the deadlock in undivided inheritances. “There are many properties that are standing empty and, even in urban centres, do not strengthen the market, particularly the rental market but also the sales market,” the prime minister began by saying, and that is why the final text from the Council of Ministers proposes that “after two years without division, one or more heirs may force the sale of the property when there is no agreement between them”.”

Luís Montenegro was confronted by journalists with questions about a VAT cut and the basic food basket, but the Portuguese prime minister made it clear that for the time being no measures of this kind are being considered.