Government says it’s indisputable that IRS cut will lead to 1.5 billion euros less than in 2023

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The government today considered it “true and indisputable” that the reductions in personal income tax will lead to a cut of 1.5 billion euros compared to 2023 and argued that further reductions in personal income tax rates would be “budgetary irresponsible”.

In a statement, the Presidency of the Council of Ministers said that the statement made by the Prime Minister at the presentation of the Government Program in Parliament that “there will be a reduction in personal income tax rates on incomes up to the eighth bracket, which will result in an overall reduction of around 1.5 billion euros in taxes on Portuguese workers compared to last year” is “factually true and indisputable”.

According to the executive led by Luís Montenegro, the phrase corresponds to what is stated in the government’s program, when it refers to a “reduction in personal income tax for taxpayers up to the eighth bracket, by reducing marginal rates by between 0.5 and 3 percentage points compared to 2023”, and in the electoral program of the Democratic Alliance.

As such, it claims to be “strictly complying with the proposal to which it committed itself before the Portuguese people” and stresses that “no member of the government or of the coalition parties that support it has ever suggested, indicated or admitted other tax reductions, namely of the same size, but in addition to what is contained in the 2024 State Budget Law”.

In an interview with RTP this Friday, Finance Minister Miranda Sarmento clarified that the 1.5 billion euros in personal income tax relief mentioned by the Prime Minister in the debate on the government’s program will not be added to the 1.3 billion euros in personal income tax relief included in the State Budget for 2024 and already in force, explaining that the measure will be around 200 million euros.

Today’s communiqué says that if there were those who had assumed that these were further reductions in personal income tax, they alone are to blame and adds that reductions of higher amounts would be “budgetarily irresponsible”.

“The fact that some political or media actors have made a mistake, fictionalizing other rate reductions of a very different or greater magnitude (and which would be budgetary irresponsible), is a serious error, for which they alone are responsible,” the statement reads.

The PSD/CDS-PP executive adds that “a basic calculation” would show that instead of a reduction of 1.5 billion euros compared to 2023, the “impact would then be 2.6 billion euros compared to 2023”.

The statement also argues that, in an attempt to disguise the error, there were “inadmissible and unfounded accusations” against the government and the prime minister that deserve “repudiation”.

On Friday evening, the director of Expresso, João Vieira Pereira, published a clarification saying that the newspaper had published a false headline (“Montenegro doubles IRS cut by summer”).

He explained that the story was based on the Prime Minister’s statements and contacts with sources, but that the newspaper didn’t count on “the fact that the Prime Minister had deceived the Portuguese in Parliament”.

“The reduction in personal income tax that Luís Montenegro announced with pomp and circumstance, the tax reduction that he defended during the election campaign, is in fact false” and is “just minor adjustments to the reduction already announced by António Costa in this year’s Budget”.

“The real tax cut is contrary to the idea that the Prime Minister sold in Parliament. It’s contrary to the idea that he announced throughout the election campaign. I only have one word to describe all this. Fraud,” wrote the editor of Expresso, apologizing to his readers.

In an interview with RTP this Friday, Finance Minister Miranda Sarmento clarified that the 1.5 billion euros in personal income tax relief referred to by the Prime Minister will not be added to the 1.3 billion euros in personal income tax cuts included in the 2024 State Budget and already in force.

The secretary-general of the PS accused the government of deceiving the Portuguese with the “hoax and fraud” represented by the tax relief that turns out to be around 200 million euros, asking the prime minister for explanations.

On the social network X (formerly Twitter), IL accused the PSD of “doing the same as the PS and not lowering the IRS”, considering it a disgrace that the tax cut is actually around 200 million euros, and the BE spoke of a “hoax”.

Moti Shabi
Moti Shabi
Moti Shabi

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