The OE2024 proposal will be presented to parliament this Tuesday, at a time when indicators are known that economic growth this year and next could be lower than previously forecast.
This state budget proposal for 2024 (OE2024) is known after the government signed on Saturday with the majority of the social partners (except CIP and CGTP) a strengthening of the medium-term agreement to improve income, wages and competitiveness.
According to the calendar already approved by the Conference of Parliamentary Leaders, the 2024 state budget proposal (OE2024) is usually discussed on October 30 and 31.
The discussions in the specialty – which will discuss and vote on the articles of the OE2024 proposal, as well as all amendments and supplementary proposals submitted by the parties – will take place from November 23 to 29. , culminating in the final global vote on the document.
This is what is already known about the OE2024 proposal:
Lower economic growth
Economic growth for 2024 will be lower than the 2% forecast in April (in the Stability Programme), according to data provided to the parties on Friday.
According to IL delegate João Cotrim Figueiredo, economic growth should be between 2.1% and 2.2% this year (above the expected 1.8%), but in 2024 it will be around 1.5%. As for the budget balance, the government now forecasts a surplus this year, less than 1%, and neutral in 2024, the Liberal lawmaker said.
PAN delegate Inês Sousa Real also said that inflation should be around 4.6% this year (compared to the 5.1% forecast).
End of enchantments
Contrary to what has happened in recent years, this state budget will have no obstacles, as the Minister of Finance has already announced.
Captivations are a budget management tool that allows the Ministry of Finance to retain (and after prior approval) part of the budget allocations of organizations and other ministries. In 2023 the value was 1,242 million euros.
Reducing the national debt
The government has focused its speech on the need to reduce public debt, with the aim of removing Portugal from the group of most indebted European countries.
The ratio of public debt to gross domestic product (GDP) is forecast to fall from 112.4% in 2022 to 106.1% this year, according to data sent to Brussels under the excessive deficit procedure, which ended at the end September was released. the value remains below the 107.5% forecast in the Stability Program – pointing to a further decline to 103.0% of GDP in 2024.
Tax exemption
The Stability Program (PE) points to a reduction in the IRS of approximately 2,011 million euros between 2023 and 2027, with the document predicting a reduction in the tax burden of this tax by 400 million euros in 2024, along with other measures that, together, amount to 524 million euros.
The document ratifying the income agreement reiterates the maintenance of the tax reduction, but without going into details on how this reduction will be achieved, whether through a reduction in rates and/or changes in the level limits or some other solution, or whether the values considered in the PE will be maintained or will be more ambitious.
Tax authorities young
OE2024 will bring changes to the Youth IRS with the new draft of the measure, which stipulates that youth will not pay IRS on their income during their first year of employment. In the second year they pay tax on 25% of their income, in the following two years on 50% of their income, while in the fifth year the exemption is 25%.
At the same time, the maximum benefit limits are increased annually, as laid down in the income agreement.
In the current model, a 50% exemption applies in the first year; 40% in the second; 30% in the third and fourth years; and 20% in the fifth and final year of the measure.
The National Minimum Wage Maintains IRS Exemption
Employees receiving the national minimum wage will remain exempt from the IRS through 2024. The guarantee that this will continue to ‘coincide’ with the so-called minimum wage was given by the government, which will imply a change to the rules established with OE2023 and will impact the value of the IRS tax measures included in the April EP are provided.
Next year, and as stated in the strengthening of the Medium-Term Agreement for the Improvement of Income, Wages and Competitiveness, signed on Saturday with the social partners (except CIP and CGTP), the national minimum wage will increase to 820 euros (10 euros more). than expected).
IRS Levels Update
The new agreement signed between the government and the social partners indicates that an update of the IRS levels will take place in 2024, without however specifying the order of magnitude. This year there was the possibility of updating it by 5.1%, in line with the salary increase for 2023 provided for in the agreement contained in the Agreement on Income and Competitiveness signed between the Government and the social partners (with the exception of CGTP).
End of the tax regime for non-habitual residents
In an interview with CNN last week, the Prime Minister announced that in 2024 the special tax levy (in IRS terms) for non-ordinary residents will end, guaranteeing, however, that “those who have it” will maintain it.
The RNH tax regime – which can benefit foreign citizens or nationals who have been abroad in the five years prior to applying for membership of this regime – allows retirees with pensions from another country to pay a 10% tax rate in Portugal. .
Employees, on the other hand, pay a 20% tax on income from work, as long as they practice a profession with high added value. People who meet the criteria can benefit from the RNH for 10 years.
Increase in the deduction of union dues
The contribution increase for the unions, currently 50%, will increase to 100%.
Refund of tuition fees
Measures aimed at young people include the reimbursement of one year’s tuition fees for each year of work in Portugal. The relevant amount (697 euros) will also be returned to students who have benefited from the school social action.
This measure will also target tuition fees for master’s degrees, but given the diversity of values, the reimbursement is set at 1,500 euros, for one year of work and for each year that the master’s degree is completed.
Free pass for students up to 23 years old and freezing cold
From January, under 23 passes will be free for all children and young students up to 23 years old, while the price of other passes will be frozen, in line with what happened this year.
Tax incentives for providing housing
Exemption from IRS and social security contributions is granted for income in kind related to the provision (rental or subletting) of housing to employees by the employer.
The measure does not concern financial subsidies for the payment of rent and the exemption limit will consist of the amounts provided for the Affordable Rental Support Program.
Tax exemption and premium waiver are also provided for amounts mobilized under the Work Compensation Fund (FCT) for housing solutions for workers.
Strengthening the RFAI
Companies will benefit from a strengthening of the Investment Support Tax Regime (RFAI), as well as contractual tax benefits for productive investments, through an increase in eligible expenses for the salary costs of employees with qualifications equal to or higher than a master’s degree. The goal is to attract and retain more qualified employees.
Restriction on updating rental prices
The government is negotiating with tenants’ and owners’ associations about a balanced situation for updating rents, after the inflation that serves as a reference prescribes that, if nothing is done, the increase in 2024 will amount to 6.94%.
The Prime Minister ruled out a repeat of the 2% ceiling applied this year.
Minimum salary increase of 3% in the public sector
The government has presented to the public administration unions a proposal for salary increases for 2024, ranging between 6.8% on the salary base and 3% for higher salaries.
This means that the salary base is now 821.8 euros and salaries up to salary level 24, which corresponds to a salary of 1,754.41 euros, will increase by approximately 52 euros. From this level the increase will be 3%, resulting in higher increases.
According to government accounts, the government’s salary bill will rise by 5.1% next year, with the average salary increase for civil servants being 3.8%.
Update of pensions and IAS
In 2024, pensions will be updated based on the formula provided by law – taking into account economic growth and inflation. The inflation reference used will only be known at the end of the year, but the already known IPC data allow us to predict increases of around 6%.
The Social Support Index (IAS), which serves as a reference for updating various social benefits, will also be increased according to the formula determined by law.
Reducing the tax on autonomous vehicles
A reduction in autonomous vehicle tax rates is also planned, dropping from 10% to 8.5%; from 27.5% to 25.5% and from 35% to 32.5%.
In addition, there will be a tax incentive for fleet renewal in the international freight transport sector.
Maintaining the VAT exemption on fertilizers
In 2024, the VAT exemption on fertilizers, fertilizers and soil improvers, as well as on flour, grains and seeds for feeding livestock, poultry and other animals, will continue.
Expansion of products with a 13% tariff in restaurants
The VAT rate applicable to the provision of restaurant services is now also 13% for juices, nectars and carbonated water or water containing carbon dioxide or other substances.
No VAT on the food basket
After the extension of the VAT exemption on a basket of 46 types of food until the end of this year, the measure is expected to continue into 2024.
ISP reduction
The price per liter of fuel returned to historically high values this summer, with expectations that the government will maintain in 2024 the mechanism that has allowed the ISP to reduce the additional VAT profit resulting from the price increase.
End of cuts in subsistence allowances
OE2024 will also end the reduction in the value of civil servants’ travel and transport allowances, ending a cost containment measure that has been in place since 2010.
On the other hand, depending on the tightening of the income agreement, there will be an update of the cost reimbursements, with the value per kilometer in your own car increasing to 0.40 euros, for domestic trips to 62.75 euros and for international trips to 148.91 euros. euros.
Source: DN
