Madeira government announces 30% reduction in personal income tax across all tax brackets by 2028

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The Regional Government of Madeira indicated today that it will apply the 30% tax differential in all IRS brackets until the end of the legislature in 2028, stressing that the reduction will be extended to the 5th bracket this year.

“Reducing taxes is, therefore, an essential point for this Regional Government, in fulfilling its promise of financial balance for families and support for companies,” said the Secretary of Finance, Rogério Gouveia, indicating that in 2024 the impact would be 170 million euros, of which 99.7 million in Personal Income Tax (IRS).

He was speaking at the plenary session of Madeira’s Legislative Assembly, at the start of the debate on the region’s budget proposal for 2024, with a total value of 2,195 million euros, the first presented by a minority Social Democrat executive and previously negotiated with opposition parties.

“After having applied the maximum reduction to the IRS rate from the 1st to the 4th bracket in 2023, which will be maintained this year, we are now applying this 30% reduction to the 5th bracket,” he said, and then assured that this tax deferral, provided for in the Regional Finance Law, will be extended to all IRS brackets by the end of the legislature.

Rogério Gouveia said that the budget proposal certifies the regional government’s “commitment to reducing taxes”, but refused to include the tax measures indicated by the majority of opposition parties, who advocate a 30% reduction in all taxes by 2024.

“The enormous loss that these measures would entail for the regional coffers, in the order of 160 million euros, would have an impact and would jeopardize the support that the government has given to the population,” he said.

The Finance Secretary clarified, however, that the budget includes a 1% reduction in the reduced VAT rate, which will go from 5% to 4% for more than 60 goods considered essential, with an estimated annual impact of 6.3 million euros.

There are also plans to reduce VAT on electricity consumed at the intermediate rate, with support of 3.6 million euros.

“The decision not to make any further changes to VAT at this time is a responsible choice by the regional government, in the sense that you can’t reduce taxes all at once without jeopardizing the sustainability of regional public finances,” he said.

During the presentation of the budget in the Chamber, made up of 47 MPs from seven parties – PSD (19), PS (11), JPP (nine), Chega (four), CDS-PP (two), IL (one) and PAN (one) – Rogério Gouveia pointed out that the appropriations allocated to areas with a social impact amount to more than 1.1 billion euros, especially in the education, health and housing sectors.

Specifically, he pointed to 10.6 million euros for digitalization in education and free textbooks in the 1st cycle, 2.1 million in support for youth organizations, 14.4 million for artistic promotion and dissemination programmes and 3.6 million for amateur sport.

In the health sector, he highlighted 11 million euros for surgery recovery programs and access to medical care, 1 million euros for the creation of the first Paediatric Palliative Care Unit, 1 million for the home hospitalization project and 1.2 million for the new individualized medicine preparation project.

Rogério Gouveia also pointed out various social supports, including the reinforcement of the Regional Supplement for the Elderly, which will increase from 80 euros per month to 110 euros, in a total investment of 4.9 million euros.

In terms of housing, the 2024 budget has allocated 111 million euros, 63 million euros more than in 2023, to stimulate the purchase, construction and rehabilitation of housing.

Rogério Gouveia also highlighted the change in the allocation of the Insularity Allowance to a “fairer and more equitable regime”, increased to a fixed amount of 662 euros, regardless of the worker’s monthly salary.

“These are realistic options that we are presenting so that Madeira will be better prepared to face future challenges,” he said, adding: “Ease and demagogic popularity have no place in our path, which is why we hope that the opposition will not go for utopia and easy promises when it comes to discussing the specialty.”

The final overall vote on Madeira’s 2024 Budget and Investment Plan proposals is scheduled for Friday.

Although the XV Regional Government’s Program for the 2024-2028 legislature includes 19 measures indicated by four opposition parties with which the executive has negotiated – Chega, CDS-PP, IL and PAN – their vote on the Budget is still unclear, with the exception of CDS-PP, which has signed a parliamentary impact agreement with the Social Democrats.

Hervé Hubert
Hervé Hubert
Hervé Hubert is a 55-year-old writer and journalist based in Porto, Portugal. Born in France, he brings a unique blend of French and Portuguese perspectives to his work. Education Hervé studied Journalism and Literature at the University of Lyon in France. After completing his studies, he gained valuable experience working with various French media outlets (Portugal France also). Career He worked for several years as a journalist in France before making the move to Portugal. In Porto, he joined the Portugal Pulse team as a staff writer. Skills Hervé specializes in storytelling, investigative journalism, and cultural commentary. He has a flair for capturing complex issues in a relatable way. Personal Life He currently resides in Porto and enjoys the city's rich culture, from Fado music to Francesinha cuisine. Hervé continues to maintain strong ties to his French heritage, often traveling back to France for family visits and cultural exploration. With his unique background and diverse skill set, Hervé Hubert adds a layered, multicultural lens to every story he covers.

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