Background information

The Government approved a set of exceptional measures to support family income, with a view to mitigating the effects of inflation and the consequent increase in prices: the 'Families First' package of measures.

Related measures include Reduction of VAT on electricity supply and Freezing of public transport prices .

This measure was taken considering that the current situation of restriction in the supply of natural gas, caused by the armed conflict in Ukraine, has caused progressive increases in the wholesale price of natural gas, and it is not expected that this situation may be reversed in the short term.

It was established by Decree-Law 57-B/2022, of 6 September.

Content of measure

In order to avoid an increase in the final prices of natural gas, in terms that burden families and small businesses, an exceptional and temporary regime was approved by Decree-Law 57-B/2022. This establishes an exceptional and temporary regime that allows final customers with annual consumption of less than or equal to 10,000 m3 to return to the regulated tariff regime, harmonising this regime with the one already in place in the electricity sector.

With this change, it is guaranteed that families and small businesses will now be able to benefit from tariffs substantially lower than those already practiced in the free market, translating into a minimum saving of 10% in their bills, even considering the increases foreseen as of 1 October for the regulated tariff.

It is estimated that with the possibility of consumers switching from the liberalised to the regulated market, VAT revenue will decrease:

• €113 million if all consumers in the liberalised market switch to the regulated market;
• €61 million if half of all consumers in the liberalised market switch to the regulated market.

These values correspond to a loss of revenue compared to the scenario in which, after the increases in the liberalised market, the State would collect more tax revenue than it currently collects.

The estimated individual saving per family is as follows:

• A couple without children will pay €65/year less VAT (1st bracket).
• A couple with two children will pay €95/year less VAT per year (2nd bracket).
• A couple with children and with central heating will pay €125/year less VAT per year (3rd bracket).

Use of measure

It is estimated by the Government that around 1.3 million families and small businesses currently in the liberalised market may benefit from this measure.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	SMEs	Applies to all citizens

Actors and funding

Actors	Funding
National government	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Informed	Informed
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Social partners jointly
• Main level of involvement: Peak or cross-sectoral level

Involvement

Social partners´ involvement took place in the context of the tripartite Permanent Commission of Social Concertation (CPCS), which includes: government representatives; representatives of employer confederations, i.e., the Entrepreneurial Confederation of Portugal (CIP), the Confederation of Commerce and Services of Portugal (CCP), the Confederation of Farmers of Portugal (CAP), and the Confederation of Portuguese Tourism (CTP); and the representatives of trade union confederations, i.e., the General Confederation of Portuguese Workers (CGTP) and the General Union of Workers (UGT).

Views and reactions

CGTP considers that the Families First package of measures presented by the government do not guarantee the necessary response to the growing difficulties of workers and their families. The "price increase response plan" does not solve the day-to-day difficulties that workers and pensioners are facing.

UGT also expressed some criticism. Families First is an essential and welcome package of measures, even if it can only be considered late and clearly insufficient, something that is all the more evident when we analyse the sets of measures that were gradually taken by other countries, which were earlier and more intense in their intervention.

Sectors and occupations

This case is not occupation-specific.

Sources

• 06 September 2022: CGTP's reaction to Families First Package (www.cgtp.pt)
• 06 September 2022: Decree-Law 57-B/2022, of 6 September (dre.pt)
• 07 September 2022: UGT's reaction to Families First Package (www.ugt.pt)
• 08 September 2022: Families First - Portuguese Government Q&A (www.portugal.gov.pt)