“There are Portuguese men and women who now face a reality that is not the best, that’s true. The refund is not exactly the same as it was before, but we must seriously say that it is for a good reason,” stated Luís Montenegro, speaking at the conclusion of the meeting of the AD (PSD/CDS-PP) top candidates in Curia, Anadia municipality.
In his address, the current Prime Minister argued that he would always aim “to make income tax withholdings [IRS] as close as possible to the tax expected to be collected” at the time of refund.
According to Luís Montenegro, the reduction in withholding rates explains why there are now Portuguese individuals who, after filing their IRS tax returns, encounter a reduction or absence of the expected refund.
For the president of the PSD, the government, by altering the withholding tax rates, “decided to be more transparent and fairer with taxpayers”.
“What is not fair is for us, as a rule, to keep more than what we are going to collect, which would inhibit individuals throughout the year from having income that is truly theirs,” he emphasized.
Luís Montenegro pointed out that the previous situation placed “taxpayers in a position of financing and lending money to the state that belongs to them,” stating that even if some argue it can be considered a savings, “it is a forced savings.”
“People have the right to have income that is theirs and money that belongs to them. This is the policy of this government. […] If what the PS wants to say when it calls this a trick is that it will hold back more money from Portuguese taxpayers than it intends to collect at the end of the year, then have the courage to tell Portuguese taxpayers and say: ‘We will increase the IRS withholding tables from now on,'” he said.
Previously, Luís Montenegro had accused the Secretary-General of the PS, Pedro Nuno Santos, of being inconsistent, stating that the party had advocated for a reduction in IRS and withholding rates, accusing the socialists of defending “one thing and its opposite”.
In the past, Pedro Nuno Santos accused Luís Montenegro of engaging in tax cuts with tricks.
At the beginning of the month, he claimed that the government’s trick was to “alter the withholding table to minimize tax withholding,” but by the time of the IRS filing, “many Portuguese who were used to receiving IRS refunds now end up paying or receive nothing”.
The Public Finance Council estimates that IRS refunds will decrease by 1.167 billion euros in 2025 due to the changes in withholding tax last year, which will have a positive impact on tax revenue.
