Everything we know about the controversy surrounding IRS cuts, Montenegro flag against “fiscal fraud”

In August, at the Festa do Pontal festival in Quarteira, the PSD president called then-Prime Minister António Costa a “tax record holder.” “Tax fraud needs to stop,” he said.

In September, the PSD proposed tax reform with an IRS cut of €1,200 million in 2023, a mandatory update of IRS brackets in line with inflation and productivity growth, an IRS Jovem of up to 15% for people under age 35, and an exemption from contributions and taxes on bonuses for productivity up to a limit equivalent to one month’s salary.

Governing with an absolute majority, the PS failed all the Social Democrats’ diplomas about cutting the IRS. Socialists criticized the “political act” of the SDP. “You want to appear in the photo of the tax cuts that you already know about”, as provided for in the state budget for 2024 (OE2024), says PS deputy Ivan Gonçalves.

The Democratic Alliance’s (AD) campaign platform echoed these proposals, citing “reducing the IRS to band eight by reducing marginal rates from 0.5% to 3% compared to 2023, with a greater emphasis on the middle.” variety”

These measures are also included in the government’s PSD and CDS-PP program presented on Wednesday. The tax breaks “will lead to an overall reduction in labor taxes in Portugal of around 1.5 billion euros,” the prime minister told parliament.

However, the 1,500 million euros mentioned by Luis Montenegro will not be added to the 1,300 million euros already recorded in OE2024, Finance Minister Joaquim Miranda Sarmento explained on Friday.

The PS called for an urgent discussion on the issue of tax breaks, deeming it a “scam”, a “fraud” and evidence of a “lack of trust” in the government. “It appears that the PSD and the AD promised what was already in the PS state budget,” Alexandra Leitão, the Socialist parliamentary leader, said on Saturday.

At the same time, Chega put forward a request for hearings with the Minister of Finance and Secretary of State for Financial Affairs Claudia Reis Duarte in Parliament.

In its statement, the government confirmed that it was fulfilling its election commitments. “The measure announced by the Prime Minister is the same as always, and consistently”, and “no member of the government or party in the coalition that supports him has ever proposed, indicated or allowed other rate cuts,” – the chief executive said on Saturday.

The promised financial shock of five billion euros should occur by the end of the legislature (2028), a government source explained. The tax cuts cover 1.5 billion in IRC rates, 500 million in housing taxes and 3 billion IRS, divided into 1 billion for IRS Jovem and another 1 billion in wages provided as performance bonuses.

The IRS cuts will be approved Friday by the Council of Ministers but require a vote in parliament. Chega has already promised to make his proposal. The party led by Andre Ventura advocates increasing the IRS cut to one billion euros.