PCP proposes today in parliament to lower IRS and VAT on energy to 6%

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The parliament is debating and voting today on a bill from the PCP (Portuguese Communist Party) that foresees the reduction of taxes on families and a higher taxation of economic groups, with the party considering that the tax effort “is very badly distributed.

PCP deputy Duarte Alves argued that there is currently “a problem of fiscal justice”, with an increasing weight of “taxation on work and consumption” and, at the same time, more “tax benefits, exemptions, trapdoors” for big business.

“We are witnessing at this moment in Portugal (…) an enormous inequality in the distribution of wealth: the country is growing – the GDP economic data show a remarkable economic growth – but this growth is being distributed in a very unequal way,” he sustained.

In this context, Duarte Alves considered that fiscal policy, through the “redistributive function of taxes”, should seek to create “a greater balance” by relieving the taxation of workers and worsening that of the large economic groups.

The PCP thus proposes to update the IRS specific deduction, frozen since 2010 at 4,104 euros, based on accumulated inflation since that year, which Duarte Alves said corresponds to a reduction to the taxable income of about 800 euros.

The deputy indicated that this measure would be applied to workers earning up to 2,900 euros gross and noted that, if approved, a taxpayer earning 1,200 euros gross per month will get an annual tax relief of around 130 euros.

In addition to this measure, and also aiming at tax relief for families, the PCP wants to reset the VAT on energy to 6%, compared to the current 23%, and apply the intermediate rate of 13% for the telecommunications sector.

With regard to the taxation of large economic groups, the PCP proposes an end to the regime of non-habitual residents and to the tax exemptions provided for in the IRS, in addition to wanting to create a tax on transactions to tax havens.

Duarte Alves affirmed that the PCP does not “enter into the right-wing demagogy of saying, in general and in abstract, that there are too many taxes”, but rather defends that the “tax effort is very badly distributed” and it is necessary to rebalance it.

“There are taxes that should be lowered – which are the taxes that cover the majority of the population – but there are taxes that should be taxed and that today are not taxed, namely those that go to offshore havens and other types of trap doors that allow them not to be taxed,” he said.

Questioned whether, if approved, this law will violate the brake rule, Duarte Alves pointed out that the PCP has safeguarded this situation, foreseeing in the bill that the measures will only come into force in the next State Budget, although they can also be applied immediately if the Government so wishes.

The PCP deputy considered that, taking into account the numbers of the economy and the promise of the Finance Minister that he will ease the IRS in the next State Budget, the executive “has room” to apply the PCP measures.

“There is no reason why the PS can’t approve this proposal, eventually discuss it later in the specialty and we can see these measures applied for the relief of the great majority of Portuguese and for the taxation of those who today have these privileged regimes,” he stressed.

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