The four-day period of debate and voting on the proposal for the 2024 state budget (OE 2024) ended yesterday in Parliament, and by the close of this edition (early evening) there had already been around 70 amendments and ( approved) clarifications to the text initially provided by Finance Minister Fernando Medina on October 10, according to a more extensive study conducted by Dinheiro Vivo (DV).
According to the count of the Assembly of the Republic (AR), the parties submitted more than 1,900 amendment proposals.
Most of the successes that came to fruition were, as expected, the initiative of the PS, which retains an absolute majority in this Parliament but is already counting down to its dissolution (scheduled for January 15).
It will be more than enough time to approve the OE 2024, as desired by the President of the Republic, Marcelo Rebelo de Sousa, and the executive still led by the outgoing Prime Minister António Costa.
The final global vote on the budget takes place today. With the support of the absolute majority of the PS (120 out of 230 AR deputies), the law that will guide Portugal’s public finances and a large part of the economy until the middle of next summer will be approved without any reservations.
Without the political crisis, this budget season would have been one of the most peaceful of Costa’s eight years at the helm of the executive branch. That was not the case and as the country headed for early elections (scheduled for March 10), some adjustments were made to reassure taxpayers and voters.
In these four days of voting, article by article, point by point, point by point, a measure came into direct contradiction to the government’s primary intention. It was the increase in the Single Circulation Tax (“two euros per month” in IUC, maximum 25 euros per year, for every owner of an older car, as Medina noted) that fell flat due to the will of the PS. yourself.
Furthermore, the vast majority of changes adopted during this four-day marathon were essentially surgical concessions and gestures of empathy towards some opposition parties. In addition to their own proposals, the socialists made proposals from parties such as PAN, Livre, PSD and PCP feasible. The sign of approval appeared last Thursday close to the start of this last part of the specialty.
With the exception of the aforementioned reason for the increase in the IUC (Medina is expected to raise an additional 98 million euros with the measure), little or nothing worrying emerged in this final from a budgetary point of view and the path to a government surplus in 2024. phase of the discussion about the new OE, but some successful changes are important and impact people.
In addition, this phase served to confirm and strengthen some of the administration’s most emblematic proposals, aimed at returning some purchasing power to taxpayers and easing the IRS tax burden on the “middle class.”
The official end of the IUC increase
On Monday, and as the PS itself had already announced last week, the socialist proposal to increase the measure endorsed by Medina, which aimed to increase the IUC of cars registered up to June 2007 by a further 25 euros next year, won victory next year . approved by the PS, without votes against and with Livre abstention.
IRS Assistance Passes
As expected, the measure regarding the IRS (updating tax rates and reducing rates, with special attention to the incomes of the so-called middle class) went without any problems. It was the same last Monday.
The bracket limits have been increased by 3% (meaning that salary increases up to 3% do not imply a tax increase or increase in the income bracket). In addition, the reduction of tax rates for the first five income brackets was approved. In the category of the poorest taxpayers, the taxable income will increase from 7,479 euros to 7,703 euros and the IRS rate will decrease from the current 14.5% to 13.25%, to be applied in 2024.
But, as the Minister of Finance said, the government mainly wanted to send a signal to the middle class. For example, the second and third income groups have a rate reduction of 3 and 3.5 percentage points respectively.
On the same day, the increase in the value of the subsistence minimum, i.e. the income level up to which one is exempt from the IRS (11,480 euros gross next year), was also approved, thus increasing the minimum wage for 820 euros gross.
Measures for rent and housing
The debate in the specialty also brought taxpayer-friendly news. This is the case with the increase in the amount of income that can be deducted from the tax authorities. Currently this amounts to 502 euros, the cabinet had proposed increasing the discount to 550 euros, but the PS and PAN approved an increase of the measure to 600 euros in rental deduction. A small buffer, taking into account the fact that landlords will be able to increase rents by up to 6.94% in 2024. The PCP and BE also proposed a ceiling on these very pronounced increases in these housing contracts, but the PS and the government were not. available because, they said, “freezing” rents would make it difficult to stabilize the rental market.
At the same time, progress was made on the possibility of direct support from the state for tenants with a housing commitment of more than 35%.
Deputies also approved an additional reduction in the IRS withholding tax in 2023 by 40 euros for employees living in rental housing and a gross monthly salary of up to 2,700 euros.
According to Lusa, another amendment approved yesterday at the initiative of the PS states that anyone who sold their house (property) but was subsequently unable to reinvest the money in the subsequent 36 months, “will have until the end of 2024 to replace the house.” IRS Return and Claim for Capital Gains Tax Refund”.
Redeem PPR to pay bank loans and VAT on oils and alheiras
A proposal to amend the PS was also approved, extending the deadline for repaying pension savings plans (PPR) to pay mortgage installments until the end of 2024, without penalty or any limit in terms of amount. It also increases the annual limit on the amount that can be repaid to repay the home loan, which rises to approximately 12,400 euros.
According to the PSD proposal, the VAT deduction on expenses at gyms, activities in educational institutions and sports clubs will be increased from 15% to 30%.
On VAT, the idea is that, taking into account the increase in cooking oil consumption (not least due to the exponential rise in the price of olive oil), the end of the zero VAT regime (which ends this year should end) (early January) will not cause a shock to the cost of this food product, which is currently taxed at 0% but which, if nothing were done, would again be taxed at 23% VAT. The PS has approved it and therefore the intermediate VAT rate (13%) must apply to frying oil. The alheiras too.
VAT still covers the “purchase, supply and installation, maintenance and repair of appliances, machines and other equipment intended exclusively or mainly for the collection and use of solar, wind and geothermal energy and other alternative forms of energy at a reduced rate. rate of 6%. And child seats and bicycle seats now have a VAT rate of 13%.
The tobacco law, which should have been very strictly tightened and would, for example, ban smoking near schools and on terraces, is not yet progressing (this would of course fall outside the OE), but the tax burden on cigarillos is improving. which is now more equivalent to that of cigarettes, thanks to the phased and faster increase in the relevant tax.
The PS has also approved the obligation for companies to pay their taxes and other tax amounts exclusively electronically from the beginning of next year.
Foreigners in Portugal
Also this Monday, at the initiative of the PS, it was agreed that the tax regime for non-ordinary residents (RNH) will remain accessible to employees of companies certified as startups.
Although the OE plans to gradually end this regime, it continues to observe exceptions, such as the cases of higher education teachers and scientific research or skilled jobs linked to “productive investments”.
According to Lusa, this new framework for NHRs “expands the scope of jobs that can benefit from a 20% IRS rate for ten years.”
Income from startups as dependent work
Still with the new economy in vogue, the AR clarified yesterday, according to Lusa, that “profits arising from stock plans for startups are considered dependent employment income for IRS purposes.” “The measure was approved with the votes in favor of the PS and PSD, the abstentions of Chega, the Liberal Initiative, Livre and PAN, and the votes against the PCP and the Bloco de Esquerda.”
In short, the tax incentive for the acquisition of shares in startups means that “the profits obtained by employees are taxed at only 50% of their value, subject to the special rate of 28% for IRS purposes, with the possibility of bundling”. he says to Lusa.
New limit on tourist accommodation
Yesterday the PS joined the Left Bloc in a very emblematic way. They approved a new limit for the execution of contracts for tourism purposes. “For each calendar year and for each part or building, only one contract can be concluded for special temporary tourist purposes,” said the measure proposed by BE, which received the positive vote of PS, PCP, BE and Livre and the vote against the PSD , Chega and IL. PAN abstained from voting.
These are just some of the main changes implemented among the dozens of adjustments and new measures emerged in the latest OE of António Costa’s government.
Luís Reis Ribeiro is a journalist for Dinheiro Vivo
Source: DN
