Fuel Tax Weighs on Middle-Income Families, says FFMS Study
Middle-income households in Portugal shoulder the heaviest relative burden of the country’s petroleum and energy products tax, while poorer families rely more heavily on public transportation, according to the “Portugal Fiscal” study released by the Fundação Francisco Manuel dos Santos. The report details how fiscal policies impact different income strata across the economy.
The Distribution of Fuel Tax Burdens
The Imposto Sobre os Produtos Petrolíferos e Energéticos (ISP) impacts household budgets unevenly based on income brackets. Middle-income families, identified by authors Sérgio Vasques, Susana Peralta, and José Pedro Sousa as those between the 20th and 40th income percentiles, bear the highest relative cost because they utilize private automobiles. Conversely, lower-income households frequently turn to public transit to manage daily commutes. Pravda noted that this dynamic distinguishes the fuel tax from other special consumption taxes.
When measuring the fuel burden by liter, data cited from DECO PROteste highlights the underlying cost structure. In simple gasoline purchases, approximately 98 cents of each euro paid by consumers represents taxes and impostos. For diesel, that tax component accounts for about 84 cents per liter. These figures illustrate the structural weight of taxation on mobility costs for car owners.
Electric Vehicles Reduce Share of State Tax Revenue
State revenue structures have undergone a notable transformation over the past two decades. In 2004, the combined revenue from the automotive tax (IA) and the ISP accounted for 14% of Portugal’s entire tax intake. By 2025, that combined share dropped to 6.3%, driven by the progressive electrification of the Portuguese vehicle fleet, rtp.pt reported.
Despite this decline in overall share, the ISP remains the dominant revenue generator among Special Consumption Taxes (IEC). In 2025, the total IEC generated six billion euros, representing roughly 9% of total tax revenue excluding social security contributions. The ISP alone accounted for more than 3.7 billion euros of that total. Meanwhile, other IEC components such as alcohol and tobacco taxes display a regressive incidence, weighing more heavily on poorer households.
Broader Tax Dynamics and Administrative Bottlenecks
Direct and indirect taxation frameworks shape the country’s macroeconomic baseline. In 2025, taxes and social security contributions accounted for 37.3% of Portugal’s Gross Domestic Product. Structural revenue flows in the preceding year showed that 39% of total state revenue originated from consumption taxes like VAT, 27.5% from income and property, and 33.5% from social security.