Government has narrow margin to reduce taxes

A former Portuguese minister of Finances said that the government has a very limited margin to continue reducing taxes in Portugal because of the cost of pensions and health.

In an interview last week with the online news site ECO, João Leão, who was Secretary of State for the Budget (2015-2019), and then Minister of Finance between July 2020 and March 2022, said with the increase in social support, pensions, and the reduction in IRS within a year the public would begin to feel a recovery in income lost to inflation.
But he warned that the government could not give people the idea that anything is possible and that there is a large margin for massive tax cuts.
Known for his tight grip on the public purse strings, the former government minister said that a tight budget with appropriations was no longer necessary since the government was no longer in an emergency situation where it had to count every red cent, and because “Portugal is now highly respected financially” overseas.
However, the ex-minister warned that “without public investment financed by European funds” – and the “recovery of revenues” – Portugal would run the risk of having an economy “equal to or worse than Europe”.
“If the economic situation deteriorates more than expected, it is only natural to set automatic stabilisers in train and that the budget deficit would suffer”.