After the earthquake that hit the political country on Tuesday, there are many uncertainties about governance in the coming weeks. In a scenario where the Assembly of the Republic is dissolved before the final vote on the 2024 state budget (OE2024) – scheduled for November 29, and which, unsurprisingly, the absolute majority of the Socialist Party would have to vote in favor –, many of the expectations of the Portuguese people will be disappointed. This is the case when updating the IRS brackets and reducing withholding taxes, increasing social support or strengthening measures to support families in paying household rent. If this scenario were to be confirmed, the country would have to live in twelfths until the formation of a new government and the approval of the relevant budget. Today the President of the Republic must make a decision after hearing the Council of State.
Pensions
The planned pension increases for 2024 will not change. The increase does not depend on the state budget, but on the application of the update formula provided for by law. The 2.7 million pensioners have thus ensured an average increase of 6.2%.
Minimum wage
In principle, the National Minimum Wage (SMN) will increase to 820 euros next year. It is an issue agreed upon in the Social Consultation and therefore there should be no obstacles to its entry into force on January 1, 2024. This reading is based on what happened in October 2021, when the 2022 state budget failed. . This lead did not stop SMN from surging in early 2022. However, the government must still approve the decree establishing the increase. Therein lies the doubt as to whether this increase will be effective.
Public function
Salary increases for state workers in 2024, between 3 and 6.8%, depend on the political option chosen. The diploma, which should include these updates, has not yet been completed. In addition to wage increases, the government service was counting on an increase in the amount paid for overtime and an end to cuts in daily allowances and transport subsidies. Without the final vote on OE2024, these valuations could be questioned. If the country temporarily lives under a twelfth regime and there is a twelfth margin, there is a possibility of repeating the situation of 2022. In other words: making progress on the negotiated measures.
tax authorities
It is one of the measures proposed in OE2024 that will be dropped. The government had decided to update the ranks and reduce the retention rate to the 5th grade. The executive’s measure was intended to provide relief to households with less economic capacity as well as the middle class. The reduction was 3.5 percentage points. The proposals announced at IRS Jovem will suffer the same fate. Remember that the intention was that young people up to the age of 26, as long as they had completed at least secondary education, would be exempt from the tax authorities in their first year of work. If the young person had a doctorate, the age increased to 30 years. The discount should gradually decrease. In the second year of work the discount was 75%, in the third and fourth years 50% and in the fifth (and final) year 25%.
Social support
The most vulnerable families will also have to wait for a new state budget. All the support provided by António Costa’s executive document – increasing child benefits, strengthening the Solidarity Supplement for the Elderly (CSI) and the Social Insertion Income (RSI) – requires new validation. The child benefit would increase by 22 euros per month, the CSI would increase by 62.45 euros and an increase in the RSI of 28 euros per month was planned. The expansion of the free childcare network also depends on the future political direction of the country.
IUC
The increase in the Single Circulation Tax (IUC) for cars before 2007, which led to noisy demonstrations across the country last weekend, as well as for other cars, has been frozen for the time being. The government had decided that a car or motorcycle registered before 2007 would pay more IUC, with a maximum of 25 euros. This value would be gradually increased until the rate represented the full tax on the CO2 emissions of these vehicles. For the other cars the expected increase was 2.9%. These measures cannot come into effect without approval from OE2024. The same applies to identified increases in taxes on tobacco and alcohol.
Rent and tolls
The increase in rental prices in 2024, as well as toll rates, are not covered by OE2024. Rents are updated based on inflation over the past twelve months (excluding homes) ending in August, which means an increase of 6.94% next year. The increase in toll prices is still awaiting the release of the year-on-year inflation rate for October, excluding housing.
Income support
The strengthening of extraordinary income support is another measure that is at risk. When the government decided not to slow down rent increases and to apply the formula provided for in the law, which implies an increase of 6.94%, it revised the support that had been in place since May this year. This reinforcement, included in OE2024, provided that families with an effort rate of more than 35% and whose income does not exceed the 6th IRS bracket (in 2024, which corresponds to an income of 39,791 euros) would receive reinforced support in the payment of the rent. The objective was that the increase for these households would in practice amount to 2%.
PRR
Investments under the Recovery and Resilience Plan (PRR) will not be affected if there is no contribution from the Portuguese State to the projects. The deployment of resources is not dependent on the OE, given its community origin.
Dinheiro Vivo journalist
Source: DN
