On the day the State Budget proposal for 2026 was delivered, Joaquim Miranda Sarmento warned the opposition that the projected surplus is 230 million euros and stated that if the country wants to avoid returning to a deficit, the room for integrating new measures presented during the specialty process is “close to zero”.
With PSD and CDS-PP out of contention for approving opposition proposals, simultaneous support from Chega and the PS will be required to pass any changes to the budget during the specialty discussion process starting this Thursday.
Last year, in a similar scenario, the two parties facilitated a permanent increase in pensions against the government’s wishes. Prior to the budget discussion, the parliament also approved PS proposals for reducing VAT on electricity and exemption from tolls on former SCUT routes.
This year, Chega and PS have not signaled an understanding, but they have intersecting priorities. Even without a formal agreement, topics such as pension increases or toll abolition will, at least, mark the specialty debate, and some proposals may be approved.
Chega wants 1.5% increase in pensions, PS conditions rise
Regarding pensions, Chega leader André Ventura called for consensus among the three major parties to facilitate a new permanent pension increase, proposing an additional 1.5% rise in pensions up to 1,567.50 euros, beyond what is stipulated by law.
Ventura expressed no objection to other parties adopting his proposal, urging responsibility on a matter of “national interest,” but made it clear that he does not favor the PS solution, which he believes is “dependent” on certain scenarios.
In the previous budget discussion, Chega, through abstention, allowed the PS proposal for an additional 1.25-point percentage increase in pensions to pass.
This year, the socialists announced a different proposal: they want a possible extraordinary supplement to be paid to retirees in 2026 to be converted into a permanent increase, allowing it to count towards the pension formation in 2027.
PS claims that this measure does not jeopardize the balance of public accounts and ensures their amendment proposals preserve the “budget surplus as presented by the government.” However, the Prime Minister has already considered that the socialist initiative is not adequately compensated in terms of financial sustainability.
To get the proposal approved, considering that PSD does not agree with this initiative, PS would need Chega’s support—a support that seems unlikely, as Ventura’s party, despite advocating pension increases, has criticized the framework of the solution presented by the socialists.
Other parties have presented proposals on this matter, such as the PCP, who demands a permanent increase of 5%, not less than 75 euros, and the Left Bloc, which proposes a minimum rise of 50 euros per pensioner.
The government’s proposal, approved in general, foresees an additional expenditure of about 700 million euros for pensioners, divided between permanent pension increases for all following the legal update formula and strengthening the Solidarity Supplement for the Elderly (CSI).
The Economic and Social Council (CES) believes the OE2026 should prioritize a “structural increase in pensions,” instead of extraordinary supports, noting that the projected increase does not prevent the loss of purchasing power, according to this body’s opinion on the budget proposal.
PS, more cautious than Chega, hopes to approve toll exemption
After the two major opposition parties facilitated the socialist initiative to end tolls on ex-SCUT last year—albeit in a legislative process prior to the State Budget—Chega and PS again push for toll removal, against the government’s position, which has opposed any toll abolition.
Chega brings several proposals to debate to exempt certain highway sections but also presented an initiative foreseeing a phased plan throughout 2026 for toll reduction and progressive exemption nationwide.
PS doesn’t go that far but proposes toll exemptions on the A6 motorway and sections of the A2 serving the Alentejo for residents and businesses based in the region—a proposal with an annual cost of 20.5 million, according to the party’s calculations. Socialist Frederico Francisco expressed his expectation to Lusa that Chega, which proposes total exemption nationwide, might enable this initiative.
The socialist bench also wants to temporarily suspend tolls for heavy vehicles on the A41, A19, and A8 while studies on congestion and future road network financing models are conducted.
VAT 0%: Chega wants now, PS links to end of ISP discount
Both parties advance proposals to exempt certain essential goods from VAT but in different frameworks, with Chega proposing that this zero rate on a basket of essential food items be applied in 2026 as a response to “a widespread increase in the cost of living.”
Meanwhile, PS proposes that the tax revenue from abolishing the discount on the Petroleum and Energy Products Tax (ISP) be “decided by the Assembly of the Republic,” in a discussion that should prioritize channeling this revenue for VAT exemption on a set of essential food items.
“The Socialist Party believes that this margin should be fully applied to reducing VAT on essential food items, using the faculty provided by the VAT Directive, which allows for ‘super-reduced rates’ (including zero rates),” the project reads.
Although the end of the discounts on the Petroleum and Energy Products Tax (ISP) is not planned in the Budget, the government has already indicated its intention to gradually eliminate this benefit, responding to recommendations from the European Commission.
This intention has even prompted criticism from Chega, which made the topic one of its main banners in the budget debate. In the general discussion, André Ventura accused the government of preparing a penalizing ISP increase and stated that environmental taxes will rise by more than 4% in 2026, to which the Prime Minister responded by accusing Chega’s leader of contaminating the debate with impositions from Brussels.
Montenegro clarified that the forecast for ISP revenue increase—approximately 4.6%—stems solely from expected consumption growth, distinguishing this estimate from the issue of the discount created in 2022 when fuel prices were higher.
Relief on commissions: PS wants total exemption, Chega limits to 0.5%
Chega and PS also converge on proposals for relief from commissions charged on early repayment (amortization) of home loans, albeit with initiatives of differing scope.
The far-right party proposes, for the next year, a maximum single rate of 0.5% on the amortized value for the mortgage amortization commission for home acquisition or construction for permanent residence.
Chega argues that credit repayment represents, for banks, a “reduction in profit margins” but also a “decrease in default risk and an increase in available liquidity for reinvestment in new loans,” and applying a single commission will “standardize the charges borne by families and promote greater predictability in costs associated with credit management.”
The PS bench goes further and wants to permanently exempt mortgage amortization operations under a variable-rate regime from commissions.
1.6 million requested by the Constitutional Court aligns PS and Chega
The subject might have escaped the budget discussion, but the president of the Constitutional Court, José João Abrantes, brought it to the forefront with an unprecedented request for a parliamentary hearing to ask for a budget allocation increase of about 1.6 million euros.
José João Abrantes said in parliament that he wrote to the Prime Minister in August to alert him to the absolute need for a budget allocation increase, but Luís Montenegro only responded on November 10 without providing guarantees. On the day of the hearing, Minister António Leitão Amaro referred any possible budget changes to the Assembly of the Republic.
With PSD and CDS-PP positioning against this increase, citing management failures, PS, Chega, and the rest of the left guaranteed they would be available to form the necessary majority to approve the increase for the Palácio Ratton budget.
Although the discussion took place outside the period for submitting budget amendment proposals, Chega was willing to alter a proposal already submitted to include the amount, and socialist Pedro Delgado Alves said there was willingness to approve this expense, recalling that, in the past, “in situations worthy of attention,” no one opposed budget amendments beyond the deadline.
