The PSD budget reform, announced in mid-August by the party chairman, Luís Montenegro, is presented to journalists today by the leader of the Social Democratic parliamentary group, Joaquim Miranda Sarmento. At the beginning of this week, the five measures surrounding the IRS were submitted to the House of Representatives, with the emphasis on reducing this tax by 1,200 million euros. The budget package will be voted on in the chamber on September 20.
The PSD proposal “relieves Portuguese families from the clearly excessive tax burden, estimated at 1,200 million euros, and allows us to embark on a path towards reducing significant disincentives to the supply of work”, refers to the flag measure that Luís Montenegro presented at the Festa do Pontal in mid-August, now in the form of a draft resolution. The document also stipulates that “for a family with a gross income for each taxpayer equal to the average monthly salary in 2022 (1,411 euros)”, there will be an annual benefit of 235 euros.
The PS parliamentary leader, Eurico Brilhante Dias, meanwhile accused the PSD of “ignoring good budget practices and the brake law” and of promising “permanent tax cuts while guaranteeing correct accounting”. The so-called ‘braking standard’, laid down in the Constitution, prescribes that ‘bills, bills or amendments that entail an increase in expenditure or a decrease in state revenues in the current economic year shall be provided for in the budget’. With this proposal, the PSD recommends that the government submit to the Assembly of the Republic within two weeks a bill with a new IRS table, which would come into effect immediately and which would be accompanied by an adjustment of the income tables. IRS withholding tax for the remaining months of 2023.
The PSD also proposes to maintain this IRS reduction in 2024, under the same conditions as it plans to apply this year, and the IRS collection will take into account the “effects of inflation.”
In addition to these two measures, the PSD has, also expected, submitted three other bills to the Assembly of the Republic, which aim to reduce the burden of the IRS. “Portugal has a serious productivity problem,” one of the documents highlights, stating that the problem “has several structural causes that justify responses of different public policies.”
In that sense, the Social Democrats want “an exemption from the IRS and TSU [Taxa Social Única, uma contribuição de trabalhadores e empresas para a Segurança Social] on performance productivity bonuses worth up to 6% of annual base salary. The exemption applies to all or part of the price up to this limit.”
The PS tax package provides for the requirement of “transparency and democratic application of excess tax revenues in relation to the state budget and automatic updating of the IRS brackets”, and adds a reduction in “IRS rates for young people up to 35 years old for a period of a maximum of 15%”, a measure that has already received a response from the government.
The socialist reaction
Last week, PS Secretary General and Prime Minister António Costa announced several measures aimed at young people at the start of the Socialist Academy. Among them, he stressed that for every year of work in Portugal, the government will refund one year of tuition fees paid to a public university in the country, equivalent to 697 euros. Moreover, “in the first year that people work, in the first year that people declare their income, the IRS will be zero and there will be a complete exemption from IRS,” the Socialist leader confirmed.
PSD vice-president António Leitão Amaro responded the next day: accused Costa of being “not a doer, but a bad follower who copies badly”. With Lusa
Source: DN
