The government led by Luís Montenegro has approved and submitted to the Assembly of the Republic its Government Program, which includes several measures that may impact the finances of Portuguese citizens.
A selection of 10 of these measures covers areas from holiday allowances to housing, including IRS reduction and social support. Here they are:
1 – Holiday allowances by installments? Government wants workers to choose
The government wants workers to have the option once more to decide if they wish to receive their holiday and Christmas allowances monthly or in the traditional full payment.
“Every worker should be able to choose how they want these allowances (13th and 14th months) to be paid: in full at two times of the year or spread out in monthly installments,” the document states.
2 – Increase in minimum wage
The government aims to “ensure the increase of the minimum wage to €1,100 by 2029 and create conditions for the average salary to evolve to €2,000 by the end of the decade, based on the addition of inflation to total productivity gains.”
3 – IRS reduction
It also promises to “reduce IRS by 2 billion euros during the legislature, of which 500 million in 2025, lowering the tax burden on income, particularly for the middle class.”
4 – Stimulating savings
Another goal is to “stimulate savings, moving toward a limited taxation system for savings and reinvested income.” This includes involving specific financial products for workers, linked to long-term savings plans, as part of the European process to strengthen savings mechanisms.
The government seeks to prioritize the financial literacy of Portuguese citizens, particularly regarding Social Security and savings, viewing this as the most pressing need for young people.
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5 – A new benefit is coming
An additional measure is the “creation of the Work Incentive Benefit, as part of a redesign of the social support system that ensures there is no loss of disposable income when work income increases.”
6 – Monitoring social benefits
The government also wants to “ensure access to social benefits does not amplify incentive effects.” It plans to strengthen the monitoring of non-contributory beneficiaries, ensuring compliance with commitments made and facilitating swift entry into the job market.
The program includes a review of the “granting and monitoring arrangement for the social inclusion income (RSI), evaluating its accumulation with other social supports and the introduction of solidarity obligations.”
7 – New developments in family policies?
The government is committed to “continuing the policies for family protection, particularly for parenthood and children,” through:
- “Continuing to expand the Happy Nursery program and simplify access procedures;
- Revisiting the parental leave regime and other measures supporting parenthood and work-life balance, ensuring an equitable approach between mothers and fathers.”
8 – “Strong” fiscal simplification
The program proposes “a strong fiscal simplification, eliminating exceptions, special regimes, and scattered tax incentives (particularly those dependent on non-observable or unverifiable conditions) in all tax codes, thus reducing inefficiency and complexity, decreasing compliance costs for economic agents, and improving distributive justice.”
9 – Government to revise insolvency regimes to facilitate agreements
The government plans to revise current insolvency regimes to facilitate restructuring agreements and ensure greater speed. This aims to “facilitate restructuring agreements, ensure speed, preserve economic value in businesses, and strengthen creditor control instruments.”
10 – Government anticipates constructing 59,000 public homes to address the crisis
The government intends to build 59,000 public homes and provide funding for additional projects, including public-private partnerships in state properties that are suitable for housing.
The Government Program advocates “quality housing for all, significantly increasing the supply of private, public, and cooperative housing, reversing the trend of price increases well above the income growth of Portuguese citizens.”
