The Executive is preparing a package of urgent measures to contain energy prices, affected by geopolitical tensions. The centerpiece is a tax cut that will reduce the VAT on fuels from 21% to 10% and eliminate the special tax on hydrocarbons. This could lower the price of gasoline and diesel by between 30 and 40 cents per liter. Taxes on the electricity bill will also be cut.
The technical impact of taxation on the final energy price ⚙️
The measure shows how the cost structure of a liter of fuel or a kWh is dominated by tax burdens. The elimination of the Special Hydrocarbons Tax, a fixed levy per volume, and the reduction of VAT, a percentage on the total, act directly on the taxable base. This approach is more effective than subsidizing demand, as it modifies the market base price. In electricity, lowering the production tax aims to reduce the wholesale cost.
The gas station, the new place to get a 50% discount 😏
It seems that, finally, filling up the tank will stop feeling like a dental extraction without anesthesia. With this cut, the grimace of pain when seeing the total at the pump could turn into a slight grimace of resignation. That said, we'll have to see how long the magic lasts and if international prices decide to keep playing yo-yo. At least, for a week, we can pretend that driving is a rational option.