President passes António Costa’s last budget

 In News, State Budget

Portugal’s President Marcelo Rebelo de Sousa has given the green light for the last budget of the PS government that is acting in a caretaker capacity until the country goes to the polls on January 10.

The State Budget was approved in a final vote on December 29 by the PS majority in parliament with abstentions from PAN (People and Animals Party) and Livre. Voting against were the centre-right PSD, the populist party Chega, the Liberal Initiative (IL) party and the Bloco Esquerda (BE) and Portuguese Communist Party (PCP).
The budget foresees an reduction in IRS tax by around €1.7Bn mostly by updating IRS tax brackets by 3% in line with the government’s estimate for inflation in 2024 (2.9%), a cut in taxes of between 1.25% and 3.5% up to the 5th tax bracket, and an increase in the ceiling for minimum non-taxable income to €11,480, and corresponds to the minimum salary for the coming year which has been set at €820.
The budget will broaden and increase the tax breaks for young people, IRS Jovem, which was created in 2020, and provides a partial tax exemption for five years for those who are starting work, and an increase in the maximum tax ceiling for deductions on permanent housing rental contracts from €502 to €600.
The government backtracked, however, on the controversial tax on old petrol and diesel cars manufactured before July 2007 – the unpopular Single Circulation Tax (IUC), which would have brought around €3.5 million to the treasury.

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