Emergency measures to curb inflation effects
An extraordinary meeting of the Council of Ministers has approved a packet of emergency measures aimed at containing energy and foodstuff price inflation which has arisen as a result of the war in the Ukraine.
The measure to introduce a “raft of extraordinary and temporary measures” was approved on Friday to alleviate the effects resulting from rising fuel and grain prices.
The Government also approved measures to establish an incentives system to support gas intensive industries and create an exceptional and temporary compensation package aimed at those involved in the fishing sector which are faced with rising production costs.
A decree-law was also approved which establishes “measures to support families, workers and companies” as a result of the fallout from the war in Eastern Europe, and another decree-law with aims to “assure the simplification of energy production procedures from renewable sources”.
At the same extraordinary meeting, the Council of Ministers approved the proposed law which will change the Budgetary Framework Law.
According to Prime Minister António Costa, the package of measures rests on four pillars. The first is aimed at containing energy costs.
“Concerning fuel, and while we await a reply to our request from the European Commission, we will press ahead with a reduction on fuel tariffs (ISP) equivalent to a reduction in VAT to 13%, we will maintain our offset mechanisms to compensate in (increased) tax revenues, and extend the suspension period on Carbon Tax until 31 December”.
According to the prime minister, these measures mean an offset reduction of 52% on the price increases for diesel, and 74% for petrol, seen since October 2021.
Regarding electricity, António Costa said that the government had last week presented an Iberian proposal which would limit increases in prices because of contagion from spiralling gas prices which would result in “savings for families and companies of around €690 million per month, supported directly by the electricity sector”.
The second pillar is aimed at supporting electro-intensive companies by reducing costs, making social security and tax payments more flexible in the most vulnerable sectors such as agriculture, fishing, transport, the social sector and industries particularly hard-hit, such as textiles, paper making, ceramic and glass making, metalwork, cement production and chemical industries.
The government will also provide €46 million in supporting the installation of solar panels this year and next for farming and for hydro-farming technologies.
The third pillar is earmarked for vulnerable families to help them deal with the rising price of food essentials and subsidised bottled gas.
The fourth and last pillar aims to accelerate energy transition in preparation for dealing better with future energy crises “by simplifying procedures regarding the decarbonisation of industry, encouraging the installation of solar panels and lowering VAT on electrical equipment that reduce families’ gas dependance.