Impact of falling VAT on the electricity and gas meter will be even lower than announced – The Economic Journal


Deco warned today that the impact of lowering VAT on electricity and natural gas will have "an even more reductive impact" than advertised on the consumer bill, by applying only to a component of the fixed term.

"If we had a hand full of nothing, we have a hand full of nothing at the moment. We are surprised, disillusioned and outraged because the text that has now been published in Diário da República has a very reductive impact on what had been announced, "said the spokeswoman of that consumer association in statements to the Lusa agency.

According to Rita Rodrigues, a "careful reading" of the decree-law published on Monday – establishing a 23% to 6% reduction in value added tax (VAT) in the power up to 3.45 kVA in the case of electricity and in the low pressure consumption of up to 10,000 m3 per year in natural gas – allowed Deco to verify that, contrary to what was announced, "what is in the text of the diploma is that the reduction will only apply to a component of the fixed term and not to its entirety" .

"From the practical point of view, this means that in the case of electricity, the annual saving of € 10.20 resulting from the reduction of VAT decreases, with this 'nuance' that is trying to go unnoticed, for only 9.12 euros annually, "he said.

Stressing that what is at stake "is not the greatness of numbers, but the principle," Deco's manager for institutional relations recalled that "what was here [inicialmente] was a VAT rebate that had been amended at the time of the troika's entry into Portugal, but since then it has been "increasingly tapering the measure, so that it now has a negligible impact on the consumers ".

"The Government understood that it should not do so at all levels, as it did at the time of the troika, but only for the lower echelons. And the truth is that now not only does it only for the lower echelons, as it applies it only to a part of the fixed term. The little is reduced to almost nothing, "he criticized.

According to Deco, the fixed term has several components and the VAT reduction is applied only to access tariffs, "because according to the justification of the Government are costs common to all operators."

"This argument does not make any sense," remarks Rita Rodrigues, recalling that "when VAT was changed from 6% to 23%, it was applied over the whole fixed component, making no sense now to have a different stance."

In addition, the consumer protection association contests that this tax reduction will benefit, as has been frequently mentioned, three million Portuguese families: "This information is not correct, we are talking about three million contracts, which are half of the contracts existing, "he says, noting that the families covered remain at two million.

It is that, explained, in the case of powers up to 3.45 kVa, it is in many cases contracts "that do not correspond to the use in homes, but in garages and storage".

"Announcing measures, but then, by the way they are introduced in the publication of the diploma, to be able to reduce its scope is clearly falling short of the announced intention," says Deco.

In this context, the association guarantees that "it will continue to fight for the 6% VAT rebate for all levels in the total energy bill and not only partially, replacing the situation that was when the troika entered Portugal."

"Our very clear commitment is to ensure – and we are already working on this – that this demand will be turned over to all political parties now preparing for elections, so as to force it to be part of the discussion of the State Budget for 2020 "He concluded.

The VAT lowering of electricity and natural gas at the lowest power was published on Monday in a decree-law, lowering the rate from 23% to 6% from 1 July.

"The fixed component of one of the elements of the price due for the supply of electricity and natural gas will be taxed at the reduced rate of 6% in the Mainland and 4% and 5% respectively in the Autonomous Regions of the Azores and Madeira, "reads the diploma published in Diário da República.

The Government, in the decree, argues that this reduction of VAT on electricity and natural gas supplies will mainly protect "a significant number" of final consumers, reducing the weight of taxes in the final price of these supplies and encouraging, simultaneously, energy efficiency and promoting environmental protection.

The decree-law also determines that the new regime also takes effect on July 1 with respect to transactions carried out as from that date on the transfer of assets of a continuing nature resulting from contracts that give rise to successive payments.

This reduction of the VAT rate was foreseen in the State Budget for 2019 and got 'green light' from the European Commission VAT Committee.

According to the Ministry of Finance, this tax reduction, together with the injection of 190 million euros in the tariff deficit, will benefit more than three million contracts – about half of the total – "reaching annual savings levels for these consumption in the order of 6% ".



Source link