Government increases fuel tax discounts to offset price hikes

Friday, 17 July 2026AI summary

💶 Finance 🏛️ Government #cost-of-living #fuel-prices #tax-relief #government-policy

Government increases fuel tax discounts to offset price hikes — Photo: ECO

The government is increasing the tax discount on the Tax on Petroleum and Energy Products (Imposto sobre os Produtos Petrolíferos e Energéticos or ISP) to 7.4 cents per litre for diesel and 4.6 to 5.7 cents for petrol. Minister of the Presidency António Leitão Amaro announced the adjustment this Friday, citing expected market price increases. The government aims to prevent the state from profiting from inflation and rising fuel costs.

Update: Fuel prices set to rise despite tax discount adjustments

Despite the government's updated ISP discounts, fuel prices are expected to increase again next week. Diesel is projected to rise by approximately 6 to 7.5 cents per litre, while petrol prices will also see an upward adjustment.

Context & Explainers

The ISP (Imposto sobre Produtos Petrolíferos e Energéticos) is Portugal's excise tax on petroleum and energy products, charged as a fixed amount per liter on petrol, diesel, and other fuels. It is one of the main components of fuel prices at the pump, alongside VAT and the carbon tax (Taxa de Carbono).

The government can adjust ISP rates — temporarily or permanently — to influence fuel prices. Rate cuts are a common policy tool to ease cost-of-living pressures on drivers and transport businesses, though they also reduce government revenue.

For consumers, the ISP is significant because even small changes in the per-liter rate translate into noticeable differences at the pump, particularly for diesel users and commercial transport operators.

António Leitão Amaro is Portugal's Minister of the Presidency (Ministro da Presidência) in the government led by Luís Montenegro. He is a key figure in the Social Democratic Party (Partido Social Democrata or PSD) and often is the government's spokesperson. Those following housing and rental policy should note his role in announcing the June 2024 measures regarding evictions and inheritances.