Treasury Secretary Insists IRS Cuts Violate Brake Rule

The finance minister said on Monday that a decree approved by parliament cutting IRS rates to level 6 violated the brake rule, but said the government would wait for a decision from the president of the republic.

“I think it violates the brake rule,” Joaquim Miranda Sarmento told reporters on the sidelines of a ministerial meeting in Brussels, insisting the legislation under consideration would lead to budget imbalances.

“For our part, we are waiting for the decision of the President of the Republic, and then we will make a decision,” he said.

The parliamentary decree to reduce IRS rates to level 6, approved by the opposition, is based on the PS bill and was received at the Palacio de Belém on July 3.

In the final global vote on 12 June, the text presented by the Committee on Budget, Finance and Public Administration based on the PS bill was voted against by only two parties supporting the government, the PSD and the CDS-PP, and was adopted with the abstention of Chegi and the votes for PS, IL, BE, PCP, Livre and PAN.

According to this decree, the rates for the 1st and 2nd levels fall respectively from 13.25% to 13% and from 18% to 16.5%, while in the tier there is a decrease from 23% to 22% and in the 4th level from 26% to 25%.

In groups 5 and 6, where current rates are 32.75% and 37%, rates are reduced to 32% and 35.5%, respectively.

There will be no reduction in the rates of the other three IRS groups, contrary to what was envisaged in the Government’s original proposal and the replacement text for PSD and CDS-PP, which left only group 9 unchanged.

Regarding the possibility of rejecting the 2025 state budget proposal in the Assembly of the Republic, the government official did not rule out the possibility of maintaining the government in its twelfth composition, but said that this option was not ideal.

“The best solution for a country is to have a budget [do Estado] “to follow the government’s program,” he said.