SDP wants to cut IRS rates for youth by a third and vote to assign excess taxes

The SDP argues that the IRS cuts it is proposing for young people allow for “a reduction of up to one-third” and wants the Assembly of the Republic to vote on how “excess tax collection” should be used.

The five tax cut initiatives that the PSD announced in mid-August and which will lead to the parliamentary debate on September 20 – four bills and a draft resolution – are now available on the Assembly of the Republic website. At a press conference on Tuesday, Parliamentary Leader Joaquim Miranda Sarmento, Vice President António Leitán Amaro and Collegium “deputy” Hugo Carneiro attended a press conference.

As has already been detailed, the SDP intends to reduce IRS rates for young people under 35 to a maximum of 15% (excluding the latter group) from January 1, 2024.

“Significant emigration of qualified youth threatens the sustainable future of the country. It is essential to keep these young people in Portugal (…) Under this regime and with the exception of the last group, the IRS marginal rates for young people are reduced to 1/3 of the current rates, a maximum of 15% in the penultimate stage,” the Social Democrats explain in the bill .

The SDP recalls that it had already submitted this proposal to the last budget, which was then rejected by the PS.

This week, Prime Minister António Costa announced changes to the IRS Jovem rules, but in a different sense: the government’s proposal envisages that in the first year of operation there will be a complete exemption from the IRS, in the second year beneficiaries As a result of this measure they will pay 25% to the IRS , in the third and fourth years they will only pay half, and in the fifth year they will pay 75% of the tax due.

The Social Democrats are introducing another bill to guarantee what they call “transparency and the democratic application of excess tax revenues in relation to the state budget,” as well as guaranteeing automatic renewal of IRS levels.

“The situation of excessive tax collection compared to the budget, and when repeated, is a democratic distortion (…) In this sense, the state’s seizure of taxpayer resources in an amount exceeding its own needs is deprived of legitimacy, therefore, it is necessary to resolve this situation,” – SDP approves.

The Social Democrats propose that parliamentary debates be held in the presence of the government whenever “a situation of excessive tax collection” arises, and that the Assembly of the Republic “directly decide where the amount of this tax will be allocated.” “excess” when the total collection of revenues from direct taxes and indirect taxes earmarked for the central government sector “exceeds by more than 1% the total amount of the same revenues provided for in the state budget for the current year.”

The same diploma enshrines automatic updating of IRS rate caps “to take into account inflation and real income growth,” using the rate of change in nominal GDP per worker as an index.

In another thesis, PSD also proposes financial incentives to improve productivity, an area in which it believes Portugal has a “major problem”.

“Low productivity has several structural causes that justify responses from various government policies, including tax (…) As an incentive to improve productivity, an exemption from the IRS and TSU for performance bonuses of up to 6% of annual base salary The exemption applies to all or part of the bonus up to this limit,” PSD suggests.

The most significant proposal announced by the PSD at the Festa do Pontal by President Luis Montenegro – a cut of 1,200 million euros from the IRS – was transformed into two initiatives: a draft resolution recommending that the government keep the measure in force. into force this year and a bill that projects the same rate cap cuts for 2024 for all categories except the last.