wallet with euros

Portugal’s State Budget in a ‘nutshell’: no miracles

Even with its income tax relief, budget gets short shrift

It is difficult to find anyone with a ‘good word’ to say about PS Socialists’ 2024 proposed State Budget.

Commentators are luke-warm; politicians quite hot under the collar.

In tabloid Correio da Manhã this morning, deputy editorial director Armando Esteves Pereira explains, in lay-speak, what it’s all about (or rather what it isn’t):

Finance minister “Fernando Medina presented the Budget proposal in a competent way: a good salesman who convinces and even has a few trump cards to twirl, like the relief in income tax for the middle class. But this sleight of hand doesn’t detract from the relevant facts. Tax revenue next year will hit record highs – and tax pressure (on citizens) will mean that for every euro of wealth generated, 38 cents will end up in the State’s coffers.

“Also, apparently, public debt will fall sharply in terms of the percentage of GDP, but, as it happens, interest on public debt will skyrocket to €7.1 billion – more than €563 million than (it was) this year.

“The payment of interest on public debt is equivalent to the expense of the country’s most important ministries. It is almost half the proposed spending for the Ministry of Health”, says Esteves Pereira.

“The litmus test on this budget is that what there is in income tax relief is compensated by revenue from other taxes, and little taxes.

“The worst (aspect) is the tendency for the economy to cool; the unfavourable winds blowing in from Europe and the fact that internally there is little capacity to turn any of this around.

“In a country of economic stagnation, so dependent on Europe and money from the State Budget, one could never hope for miracles”.

Pages today dedicate themselves to calculations of what a two-child family earning x-number of euros can hope to ‘save’ in income tax; what pensioners can hope to receive (a 6.2% increase on pensions that, in the final analysis, are usually very challenging to survive on), and why owners of cars that pre-date 2007 can expect to pay more for annual road fund tax. The zero VAT on essential foods is also ‘due to end’, but the government is promising “direct supports to families” who rely on it.

Nonetheless, it is hard to find an opposition party that applauds Fernando Medina’s efforts: PSD social democrats refer to the fact that citizens’ overall tax burden hardly changes (“as much as the government talks in reducing income tax, the tax burden on the Portuguese will increase significantly”); CHEGA dismisses the whole exercise as “a lot of propaganda”, with no promises for growth; Iniciativa Liberal bemoans the dearth of solutions for the collapse in public services (“this is a document without ambition or strategic vision”); Bloco de Esquerda talks, as always, of a “lack of sensitivity” on the part of the government for so many families at such a difficult time; PCP communists cannot forgive what they see as “further mobilisation of privileges and favours for economic groups“, while LIVRE and PAN seem to wobble on a fence of their own making, neither willing to criticise overtly, nor praise.

This is a subject that will go round and round for weeks now – but as CM’s columnist explains, there really could never have been any expectation for miracles.

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