June 21, 2018 / 7:06 PM / a year ago

Portugal parliament rejects petrol surcharge in blow to government

LISBON (Reuters) - Portugal’s parliament approved on Thursday a motion by the centre-right opposition to end a surcharge on petrol, undermining the ruling Socialists as their leftist allies sided with the opposition by abstaining and threatening revenues.

FILE PHOTO: A general view of the Portuguese parliament during a debate on the 2018 state budget in Lisbon, Portugal November 27, 2017. REUTERS/Pedro Nunes/File Photo

If the motion takes effect it could rob the government of hundreds of millions of euros in revenues just as it begins to draft next year’s budget with the aim of continuing to cut the budget deficit.

The surcharge represents six cents per liter on petrol and diesel sales.

The minority Socialist government’s Communist and Left Bloc allies sided with the opposition by abstaining from the vote in an important signal of their growing irritation with tight budgets by the administration.

“[The surcharge] represents hundreds of millions of euros to the state budget but only a few cents per liter out of families’ income as a part of their spending on petrol,” said lawmaker Carlos Cesar, who heads the Socialist bloc in parliament, before the vote.

The motion will now be discussed by parliament in detail before it will go into effect but could still be derailed in subsequent votes. It was not clear when this will take place.

The Socialists came to power in 2015 and rely on the Communists and Left Bloc for a majority in parliament.

The leftist allies have put pressure on the Socialists this year to open the purse strings, with the economy growing strongly and the budget deficit having been cut to its lowest level in decades.

The Socialists introduced the surcharge on petrol in 2016 when crude prices were low in an effort to raise revenues but crude has subsequently risen, giving the government more income through other taxes on petrol sales.

“Nothing now justifies maintaining this tax, if not the fiscal voracity of the Socialist government,” said lawmaker Pedro Mota Soares, who heads the parliament bloc of the rightist CDS-PP. “This is a fiscal grab on tax payers.”

Reporting By Sergio Goncalves, writing by Axel Bugge, editing by Andrei Khalip and Alexandra Hudson

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