Portugal rejects claims of fuel tax windfall as prices hit yearly high

Government defends fuel tax policy

Portuguese Environment and Energy Minister Maria da Graça Carvalho rejected allegations that the government is profiting from rising fuel prices during an urgent press conference in Lisbon on 7 September 2026. Fuel prices reached their highest level of the year on Monday, with diesel increasing by up to 12 cents per litre and petrol rising by approximately 10 cents. The minister insisted that the executive is not making a windfall from the situation, pointing to an automatic mechanism that returns extra VAT revenue through discounts on the fuel tax (ISP). Since 26 February 2026, this compensation scheme has amounted to more than 700 million euros in fiscal relief. Prime Minister Luís Montenegro also asserted that the state is forfeiting revenue to balance the social burden, stating that all citizens are suffering from the escalation.

The government is not profiting from this fuel crisis.

Opposition claims billion-euro windfall

The government statements came in response to criticism from Socialist Party (PS) Secretary-General José Luís Carneiro, who spoke during a visit to a petrol station across the border in Tui, Spain. Carneiro argued that the state collected over 1.048 billion euros in extra revenue from fuel taxes between April 2024 and the end of 2025. He stated that the treasury gains nine cents on every litre of diesel and six cents on every litre of petrol sold in Portugal. The PS leader noted that fuel is between 30 and 40 cents cheaper per litre in Spain, urging parliament to reconsider proposals to lower fuel VAT from 23% to 13%, which would reduce prices by 17 cents per litre. PS parliamentary leader Eurico Brilhante Dias reinforced these claims, arguing that official state accounts confirm higher revenue collections.

International factors and European market context

Minister Carvalho attributed the sharp increases to geopolitical instability in the Middle East, tensions around the Strait of Hormuz, and earlier US military action in Iran. She also cited European refinery closures, including one facility in Portugal, which reduced regional supply and raised crude oil prices. Carvalho maintained that Portuguese fuel costs remain aligned with the broader European Union, noting that recent increases are slightly below the EU average. While pump prices in Portugal remain higher than in 18 EU member states, the minister characterized Spain as an exception due to its lower tax rates, noting that pre-tax diesel can be up to 10 cents more expensive in Spain despite cheaper retail rates.

The price of fuels in Portugal is in line with the rest of Europe and recent increases are slightly below those practiced in the European Union.

Targeted relief and regulatory scrutiny

Rather than adopting universal tax cuts, the executive confirmed it will maintain targeted support for specific sectors, including agriculture, professional transport, taxis, and emergency services. The government extended the 25-euro discount for the solidarity gas bottle program until the end of the year, forming part of a 100-million-euro package for vulnerable groups. Carvalho cited economists including Mário Centeno to justify targeted aid as the most efficient policy tool during an inflationary period. Furthermore, the government announced plans to expand the oversight and sanctioning powers of the energy regulator ERSE to improve market transparency. Passenger transport association Antrop warned that the termination of earlier support measures threatens public transit service contracts across the country.