IAS with biggest increase since then 2006O
The Social Support Index (IAS) rose by 8.4%, ie to EUR 480.43. This is the largest increase since its inception in 2006. The update of this index will be reflected in the increase in various social benefits, such as tuition fees, pensions, unemployment, social and sickness benefits, among other social security support.
Toll up 4.9%
The price of tolls on highways increases by 4.9%. This is the limit declared by the government, which has decided to stop the increase based on inflation. The concessionaires had proposed increases of between 9.5 and 10.5%. This brake will cost the state treasury about 140 million euros. On Brisa, which has the concession of 11 national highways, from January 1, almost 70% of class 1 tolls will rise, highlighting an increase of 1.05 euros on the A1, between Lisbon and Porto, and of 1, 10 euros on the A2, between Lisbon and the Algarve.
A brake on the rent increase
The government has limited the rent increase to 2% in 2023. Without this brake, the increase based on inflation would be 5.43%. To support tenants up to the age of 35, the maximum rental values allowed in the Porta 65 program have been updated. For example, renting a T2 in Lisbon with the support of this program was limited to a maximum of 756 euros and, in 2023, this ceiling will be 1150 euros. In Porto, also for a T2, the current limit is 581 euros, but with the update it will be 1,000 euros.
Bread is getting more expensive
The Association of Trade and Bakery Industry has already announced that the price of bread will rise to keep pace with the increase in raw material prices and the minimum wage. Fluctuations in food prices depend on market conditions and inflation and there is no certainty about evolution in this area. What you can count on is VAT reduction on plant-based drinks and yoghurts, butter, margarine and vegetable cream and canned fish and shellfish.
Minimum wage rises to 760 euros
The national minimum wage will increase from the current 705 to 760 euros. The subsistence minimum is already rising from 9870 to 10,640 euros per year, which means that income up to this amount is exempt from IRS. The year 2023 also brings an increase in the minimum amount of unemployment benefit, which will increase by EUR 41 to EUR 550.68. The maximum amount of this installment will increase from EUR 88.75 to EUR 1196.75.
Pensions increase between 3.89% and 4.83%
The pensions of the 2.7 million retirees from Social Security and Caixa Geral de Aposentação will be updated between 3.89% and 4.83%. For pensions up to 960.86 euros, the increase is 4.83%; 4.49% for installments above 960.86 and up to 2882.58 euros; and 3.89% for renovations between 2882.58 and 5 765.16 euros. The increase will be only half of what was foreseen due to the half board bonus paid in October.
Update on IRS echelons
IRS brackets are updated by 5.1%. The government will also reduce the marginal rate of the second bracket by two points from 23% to 21%. As a result, the average rate of the other brackets will also decrease. A new withholding tax model will also be introduced, with the creation of an intermediate rate. The new tables have yet to be published and will not take effect until July, without retroactive effect. Families can count on an increase in the IRS deduction from the second child under six, which rises from 750 to 900 euros. For young people starting their careers – between 18 and 26 years old with qualifications of level 4 (vocational training) or higher or 30 years old in the case of doctorates – an IRS exemption of up to 50% of the income in the first year of work was stipulated (currently 30%); 40% in the second; 30% in the third and fourth year; and 20% in the fifth. In addition, families who have credits for the purchase of housing can receive a reduction of one step in the withholding tax. This ability can be activated from this month of January. This government measure, which aims to combat the increase in monthly costs for the loan for buying a house, only applies to employees who have a loan for their own permanent home and a gross monthly salary of up to 2,700 euros. Employees must inform their employer that they want to reduce the monthly withholding tax.
Another 52 euros for civil servants
The minimum wage in the state will increase from 705 to 761.58 euros. The increase will be 52.11 euros for salaries up to 2600 euros gross and 2% for higher salaries. The average wage increase for state workers will be 3.6%. The government also announced increases of 5.1% for employees in the state-owned company. The Executive wants to set an example for the private sector which, under the income agreement signed at the Social Concert, provides for an increase in the IRC for companies to implement wage increases of 5.1% next year.
More ISV and IUC in cars
The Motor Vehicle Tax (ISV) and the Single Traffic Tax (IUC) will increase by about 4%. Due to the ISV, the sales price increases by an average of 1.6%. This year, the aim is to encourage scrapping of end-of-life vehicles again, a solution that has yet to be evaluated in advance. In 2023, companies with a fleet of electric vehicles, plug-in hybrids and natural gas vehicles, passenger cars will be taxed at rates of 2.5%, 7.5% and 15%, depending on the acquisition value of the vehicle.
Electricity and gas are rising in the regulated
The price of electricity on the regulated market will increase in January by 1.6% compared to December, which translates into a 3.3% increase compared to the average price recorded in 2022. On the liberalized electricity market, EDP Comercial announced indicates that the electricity price will increase on average by about 3% next year for residential customers. Endesa revealed it will maintain prices, Iberdrola says electricity bills will fall by an average of 15% next year, and Galp also estimates an average reduction of about 11%. To reduce the impact of energy costs on households, the government is reducing VAT on electricity bills to 6%, but only on the first 100 kWh of consumption and only on contracted power up to 6.9 kVA. The regulated rate for natural gas will also increase to about 3%. In the free gas market, Galp indicated that it would leave natural gas invoices unchanged “in the first three months of 2023”. To support gas increases, an additional million euros will be made available for the “solidarity bill”. The social energy tariff will reach families with an annual income of up to 6,272 euros, both on the regulated and the free market.
Incidental tickets are on the rise
The government has set the freeze of the value of passes and the rate applicable in 2022 for CP tickets for regular transport. The rate increase authorized by the Mobility and Transport Authority for next year, due to the evolution of inflation in 2022, amounts to 6.11%, but can only be applied “on tickets and rates for occasional transport”. In Greater Lisbon, however, Carris Metropolitana has already announced that it will not increase the prices of occasional tickets. Navegante fare passes and occasional Carris Metropolitana tickets will keep the prices applied in the year that just ended this year. In the Porto metropolitan area, occasional tickets of the Andante intermodal fare will increase by an average of 1% from this January.
Bank fee increases are slowing
After several consecutive years of rising bank commissions, the largest financial institutions in Portugal should give a pause to strong increases next year. Banks have argued in recent years that they need to raise fees, largely because interest rates are negative. Now that this indicator is recovering due to the sharp rise in policy rates, some banks have decided to halt the recorded surge and others are talking about “one-off” updates. But no one gives in to lower prices.
Asked by DN/DV about plans to change prices for next year, Caixa Geral de Depósitos (CGD) said that “it has decided not to promote any process of global commissions update for 2023”. A position similar to that of BPI guaranteeing that “changes are not foreseen”. However, the same official CGD source took the opportunity to clarify that “possible commissioning changes” it plans to implement “will be due to legal/regulatory changes or factors related to Caixa’s positioning in the market and costs incurred in providing services, in accordance with the principles of social responsibility and fair value to the customer”.
Novo Banco, for its part, admits that it will continue next year with a “one-off” increase in bank charges, but “markedly lower than expected inflation”. BCP only mentioned that it does not comment on its commercial policy. But the bank’s CEO, Miguel Maya, revealed at the Money Conference that he “doesn’t think it’s rational to cut commissions, as long as the customer understands it’s good service.” But he assured that if we continue with updates, the increase “will not keep pace with inflation in general terms”.
At the same conference, the intervention of the director of Novo Banco went in the same direction. “Commissions should reimburse the investments made by banks in technology,” Luís Ribeiro stressed. However, he stressed that with inflation above 10% “bank prices will not move in the same direction”.
Santander has not responded to the questions sent at the time of publication.
In the first nine months of 2022, the six major banks – BCP, BPI, CGD, Banco Montepio, Novo Banco and Santander – recorded a turnover of more than 2 billion euros in bank fees. A value that represents an increase of about 9% compared to the same period in 2021. However, as some bankers emphasized when presenting the accounts, the evolution of income was not only due to the rise in prices, but also to the increase in the number of services provided by banks during this period. Sarah Ribeiro
Dinheiro Vivo Journalists
Source: DN
