PM promises economic growth above EU average until 2026
PM António Costa presenting the budget recently. Image: António Pedro Santos/ Lusa

2024 State Budget: debate begins in parliament

… with opposition focus on tax tweaks

Portugal’s parliament begins two days of debate today in the first reading of the Socialist government’s budget bill for 2024.

None of the opposition parties support the bill, but it is “guaranteed approval”, explains Lusa by dint of the fact the government holds an absolute majority. In other words, notwithstanding all the social and public sector strife and unrest, the government still holds the whip hand.

The debate, beginning at 3pm, is expected to open with a speech by prime minister António Costa.

“Since he has been in office, this will be the 10th time that he has presented a budget bill to parliament”, writes Lusa. “Of these, one – the first for 2022 – was rejected at its first reading, which sparked a political crisis and led to early parliamentary elections, which the PS won with (its) absolute majority.

“In recent weeks, when speaking about the budget bill, the prime minister has sought to emphasise the uncertainty inherent in the current global economic climate, arguing that his main objective is to provide Portugal with a “safe haven” from the current external turmoil, maintaining growth (projected to be 1.5%) and employment at “high levels” and reducing public debt through budget surpluses.

“On Saturday, addressing the Socialist Party (PS) leadership, justifying the option of aiming for budget surpluses this year and in 2024, Costa argued that it would be irresponsible for the country to spend everything it has now and pointed out that reducing the debt will save €2.6 billion in interest.

“On the other hand, he emphasised “the 5% benchmark update” of civil service salaries, the 6.2% increase in pensions from January, the reinforcement of social benefits and a reduction in personal income tax of around €1.5 billion in 2024.

“On a purely political level, the prime minister mainly criticised the right-of-centre opposition, describing them as “perplexed” as to what to say about (this) draft budget.

“They’ve said a bit of everything: that the budget is all ‘pipi‘ (extremely neat) and well presented and preppy; they’ve said that I’m a Luso communist; and the Liberal Initiative has even said that I had three hands.”

This latter remark is based on the perception that the budget is increasing taxes in a number of ways, not least in the measure to increase road fund tax (IUC) for cars that pre-date 2007. This measure has created a groundswell of opposition. The petition raised against it has already mustered over 400,000 signatures – making it the most popular petition in Portuguese democratic history. It is understood that the PS bench is committed to reviewing its proposal in the committee stage of the bill.

But as to all opposition parties’ intentions, they are firmly against.

Luís Montenegro of the PSD has said: “We are being fooled here; the country is being fooled (…) In terms of direct taxes, changes are insignificant and limited; in terms of indirect taxes, which affect everyone, the government is going to charge much more in 2024 than it already did in 2023 and 2022.

Liberal Initiative says much the same. CHEGA, the more populist right-wing party, has labelled the bill “the biggest con” and the “biggest scam”, while left-wingers Bloco de Esquerda and PCP communists tend to agree, on different levels.

Parliament’s two smallest parties, PAN ande LIVRE – both with just one MP – have yet to announce whether they will abstain on this first reading, as they did for the 2023 budget bill. Sources for the government have said it is expecting both parties to support the document, but neither appear to have said anything particularly promising yet. ND