Finance Minister Joaquim Miranda Sarmento will be heard in parliament this Thursday about the controversy surrounding the government’s announced IRS cuts and the real impact it will have on families.
These hearings before the Commission on Budget, Finance and Public Administration (COFAP) were held at the request of Chega and were voted in favor by all parties, including the PSD, with Livre abstaining.
Miranda Sarmento’s COFAP debut comes amid the controversy surrounding the IRS cuts announced by the executive director led by Luis Montenegro, with Chega wanting to question the minister in charge “about what effective IRS cuts the government is actually proposing to make, and what the real impact this will have on Portuguese families.”
The announcement of tax relief was made by the Prime Minister at the start of the debate on the Constitutional Government programme, during which he announced “a reduction in IRS income rates to the eighth level, which will lead to an overall reduction of approximately €1,500 million in taxes on labor in Portugal according to Compared to last year, this is especially felt in the middle class.”
A day later, on April 12, in an interview with RTP, the Minister of Finance clarified that the €1,500 million IRS cut announced this year by Luis Montenegro will not be added to the more than €1,300 million of tax breaks registered in the State Budget 2024 (OE2024) has already entered by virtue of.
Opposition parties then accused the government of trying to deceive the Portuguese.
The government in its statement found it “true and undeniable” that the IRS cuts would result in a reduction of 1,500 million euros compared to 2023, and said that further reductions in IRS rates would be “fiscally irresponsible.”
The executive subsequently updated the tax cuts in force since January from €1.327 million to €1.191 million thanks to the 2022 returns submitted in 2023.
The IRS reduction recommended in OE2024 and the impact of which was recorded at the above-mentioned 1.327 million euros includes an update of the 3% rate brackets, an increase in the tax-free value (minimum existence) and a reduction in the rates in the first five brackets being between 1.25 and 3.5 percentage points points.
The government proposal, approved by the Council of Ministers, provided for a reduction in rates by 0.25 and three percentage points to the 8th income level, with the largest reduction (three and 1.25 points) affecting the 6th and 8th income levels, respectively. brackets.
This Wednesday, during the two-week debate with the Prime Minister, the leader of the PSD party, Hugo Soares, announced that his party had presented a text to replace the government proposal, moving closer to what the PS, Chega and BE are doing regarding rates. which apply to the brackets and specific deduction, and also recommend that the government consider extending the home loan expense deduction extension.
In terms of rates, the PSD proposes a further reduction of 0.5 percentage points in the rates applicable to the 3rd and 4th income groups, which thus increase to 22% and 25% respectively, or in other words to the same , which protects PS. .
As for the 6th group, the PSD claims that the rate is reduced to 35%, that is, one percentage point less than what the government proposed, while changes in this income group, which corresponds to gross wages between approximately 2,200 euros and 3,100 euros, led to sharp criticism of the PS, which advocates maintaining the rate at this level (36.5%).
With this project, the PSD is also moving closer to the tax scheme advocated by Chega, although the party led by André Ventura advocates sharper rate cuts for band 6 (to 32%) and band 5 (to 31.5%). .
The PSD proposal also clears the way for updating the income limit based on inflation and the rate of change of GDP per worker, ensuring that this formula will be used “unless otherwise provided by the statute that specifically changes it,” IRS Code Defining Brackets article.
Following approval by the Council of Ministers, the executive said the proposed law would bring additional benefits of €463 million (€348 million this year, to which €115 million is to be added in 2025 through reimbursement), but this amount must now be -sort of a review in light of the project presented by PSD.
The Socialist Party has accused the government of focusing tax breaks (€348 million in 2024) on higher incomes, prompting the Socialists to press ahead with a proposed change that would concentrate the largest share of benefits at lower levels.
The remaining parties also presented different proposals to reduce the IPS, lowering them to the specialty where they were discussed.
Author: Lusa
Source: CM Jornal
I’m Dave Martin, and I’m an experienced journalist working in the news industry. As a part of my work, I write for 24 News Reporters, covering mostly sports-related topics. With more than 5 years of experience as a journalist, I have written numerous articles on various topics to provide accurate information to readers.