The Portuguese government will decide on Thursday in a Council of Ministers meeting to grant a bonus to retirees and reduce income tax brackets (IRS) for workers. Retirees with pensions up to 1,611 euros will receive an extraordinary bonus of between 100 and 200 euros in December, totaling 400 million euros. Additionally, the IRS will be reduced to the sixth bracket, which will also amount to 400 million euros.
Efforts to Support the Middle Class
Luís Montenegro, the Prime Minister of Portugal, stated that this tax reduction is aimed at "supporting the middle class." He said in Parliament: "Families can no longer bear this pressure." This announcement came after a discussion regarding a no-confidence motion in which the center-right Democratic Alliance (AD) raised these decisions.
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Critique and Review of Financial Policies
Economists have reacted differently to these decisions. João Rodrigues dos Santos, who teaches at the European University, considers these measures legal but questions their approach. He believes that these actions should be structural and reflected in the state budget, not merely based on the government's financial capacity.
Tiago Caiado Guerreiro, a tax lawyer, also noted that rising prices mean increased tax revenue for the government. He pointed out that tax revenue from VAT has risen due to increasing fuel prices, and this issue should be returned to the benefit of the people.
Challenges and Alternative Proposals
Both experts believe that taxes in Portugal are very high and need to be reduced. Caiado Guerreiro emphasized the necessity of reducing income tax (IRS) and suggested that the tax system should be simplified. On the other hand, the Socialist Party (PS) is calling for a reduction in VAT on essential goods to alleviate financial pressure on families.
However, Caiado Guerreiro stated that reducing VAT may be challenging and requires approval from the European Union. Meanwhile, Rodrigues dos Santos is exploring the possibility that reducing VAT may become a necessity in the future, especially in conditions where fuel prices exert pressure on the overall economy.
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