The PSD argues that the reduction in the IRS it proposes for young people would allow a reduction of up to a third and wants the Assembly of the Republic to vote on how to use any ‘excess tax collection’.
The website of the Assembly of the Republic now makes available the five tax reduction initiatives announced by the PSD in mid-August and which will lead to a parliamentary debate on September 20 – four draft bills and a draft resolution – to be presented on September 20. Tuesday at a press conference by parliamentary leader Joaquim Miranda Sarmento, by Vice President António Leitão Amaro, and by the bank’s ‘vice’ Hugo Carneiro.
As already explained, the PSD plans to reduce the IRS rates for young people up to the age of 35 to a maximum of 15% from January 1, 2024 (except for the last bracket).
“The significant emigration of qualified youth is endangering the sustainable future of the country. It is crucial to keep these young people in Portugal (…) With this regime, and with the exception of the last bracket, the marginal IRS rates for young people will be reduced to 1/3 of current rates, with a maximum of 15% in the penultimate step,” the Social Democrats explain in the bill.
The PSD recalls that it already made this proposal in the last budget, which was subsequently rejected by the PS.
This week, the Prime Minister, António Costa, announced changes to the IRS Jovem rules, but in a different sense: the government’s proposal stipulates that in the first year of operation there will be a full exemption from the IRS, in the second year the beneficiaries of the IRS measure pay 25% of the IRS they would have to pay, in the third and fourth years they pay only half, and in the fifth year they pay 75% of the tax due.
The Social Democrats are submitting another bill to guarantee what they call “transparency and democratic application of excess tax revenues in relation to the state budget,” which also guarantees the automatic updating of the IRS levels.
“A situation of excessive tax collection compared to the budget, if repeated, is, moreover, a democratic distortion (…) In this sense, the seizure of taxpayers’ resources by the State in an amount beyond its own exceeds needs, legitimacy. it is necessary to regulate this situation,” the PSD states.
The Social Democrats propose that a parliamentary debate be held, in the presence of the government, whenever there is a “situation of excessive tax collection” and that the Assembly of the Republic “expressly decide on the allocation of the amount of this tax collection”. excess” , whenever the total receipt of direct and indirect tax revenues intended for the central administration sector “exceeds by more than 1% the total of the same revenues provided for in the state budget for the current year”.
The same diploma establishes an automatic update of the IRS bracket limits, “taking into account inflation and real income growth,” using the rate of change in nominal GDP per worker as an index.
The PSD also proposes tax incentives in another diploma to increase productivity, an area where it believes Portugal has “a serious problem”.
“Low productivity has several structural causes that justify responses from various government policies, including taxes (…) As an incentive to improve productivity, an exemption from IRS and TSU on performance productivity bonuses worth up to 6% of annual basic salary. Until this limit, the exemption applies to all or part of the bonus,” the PSD states.
The most emblematic proposal announced by President Luís Montenegro by the PSD at the Festa do Pontal – the reduction of the IRS by 1,200 million euros – was translated into two initiatives: a draft resolution to recommend to the government that the measure should still be in force let it be. this year and a bill predicting identical cuts in marginal rates for 2024 for all brackets except the last.
Recommends review of IRS tables within 15 days and declines to violate brake rule
The PSD also recommends that the government revise the IRS tables within fifteen days, reducing the marginal rates in all brackets except the last one, and rejects that its proposal violates the so-called ‘braking standard’.
In another diploma, already with the force of a bill, the PSD proposes to maintain the IRS reduction in 2024, exactly in the same way as it defends for this year.
In the draft resolution for 2023, the PSD states that this reduction in the IRS “is offset by and is less than both the surplus of total tax revenues (2,150 to 2,500 million euros) and the surplus of the IRS revenue component (1,300 to 1,800 million euros) . ), compared to the revenue growth already foreseen in the 2023 state budget”.
“So a tax reduction intervention that comes into force in 2023 and as long as it falls within this interval, as is the case (with an estimated cost of 1,200 million euros), respects the constitutional requirements (namely the ‘brake law’) and budget balance, as well as the objectives for the reduction of the deficit and public debt proposed by the government and approved by the Assembly of the Republic for 2023,” defends the PSD.
The PS parliamentary leader, Eurico Brilhante Dias, accused the PSD this week of “ignoring good budget practices and the brake law” and “promising permanent tax cuts while guaranteeing correct accounting.”
The so-called ‘braking standard’, enshrined in the Constitution, stipulates that “bills, bills or amendments that entail an increase in expenditure or a reduction in state revenues in the current economic year shall be provided for in the budget”.
Therefore, the PSD recommends that the government submit a bill to the Assembly of the Republic within fourteen days with a new IRS table, which would come into effect immediately and would be accompanied by an adjustment of the withholding tax tables. IRS for the remaining months of 2023.
As already explained, the PSD proposal includes a reduction in marginal rates in all brackets except the last, with a more significant reduction (of 3 percentage points) between the third and sixth brackets, which relates to annual income between 11,284 and 38,632 euros.
According to the PSD proposal, the reduction in the marginal rate in the first bracket would amount to 1.5 percentage points (from 14.5 to 13%), 2 points in the second bracket (from 21 to 19%), with smaller decreases in the higher disks. (0.5 percentage points in the seventh and 0.25 in the eighth), with the rates for the ninth and final bracket and the solidarity contributions remaining unchanged.
The Social Democrats present two concrete examples: “for a family with a gross income for each taxpayer equal to the average monthly salary in 2022 (1,411 euros), an annual benefit of 235 euros is estimated”, while for a family with a gross monthly income that is twice as high as the average (2,822 euros per month) “the tax reduction will be 741 euros” per year.
The bill that extends the measure until 2024 is justified by the PSD with the belief that “this reduction must continue in the future”, with the party proposing the same tariff table that it proposes for 2023, in this case from January of next year. .
Source: DN
