Minister wants 3% GDP growth, end to windfall tax on company profits soon

  • Lusa
  • 1 June 2023

"As long as the circumstances that allowed excessive profits to be generated disappear they should be reassessed. The costs of energy are going down in a very clear way", said the Economy minister.

Portugal’s minister of economy and maritime affairs hopes the country will end 2023 with growth of 3% or “a little above” and defends the end of the tax on windfall profits of companies “as soon as the circumstances” that justified it disappear.

In an interview with Público newspaper and Renascença radio station, published on Thursday, António Costa Silva says that the “extraordinary behaviour” of exports gives him the “conviction” that the evolution of Gross Domestic Product (GDP) may reach a “magnificent result” of “3% or a little bit above that” this year.

Even so, he points to the behaviour of the German economy as a “great imponderable”, which could make this goal unfeasible: “[The recession in Germany] is another great imponderable. Then we wouldn’t be able to reach 3%. For now, it is a technical recession. It is very possible that Germany will still recover. But if that doesn’t happen, the recession in Germany, if we continue to have a significant export performance and the reduction in the inflation rate and interest rates, I’m going to see more contribution from domestic consumption in the second part of the year,” he said.

About the possible reduction of the tax burden on families, which he defended this week in an interview with Spanish newspaper El Mundo, Costa Silva recalled that “the finance minister has already announced, having an extremely important cushion that should be distributed to citizens, that he is going to make a reduction of personal income tax in the next few years”.

“It is an extremely positive measure. If we can combine it with a selective or cross-cutting relief of the IRC (corporate income tax) we can have an even more competitive framework,” he maintained.

Although admitting that there is still “no consensus” within the executive on this matter – “the government continues to debate, to discuss. […] Let’s see how we can reach a solution”, he said. The minister is of the “very firm opinion that the tax system when relieved has a very big impact on the economy, both on businesses and on families”.

Regarding the tax on companies’ windfall profits, applied to the energy sector, the economy minister believes that “these taxes are only justified in one-off and sporadic situations” and that, “as soon as those circumstances disappear, they should be removed” so as not to “excessively penalise companies”.

“As long as the circumstances that allowed excessive profits to be generated disappear they should be reassessed. The costs of energy are going down in a very clear way,” he reiterated.

Asked whether the government’s blocking of investment by Chinese companies in 5G could lead to retaliation by China, António Costa Silva emphasised his position that “companies are welcome, of course Chinese companies”, but admitted that “the 5G part, the information systems are more complex issues that have to be addressed”.

“And I hope that a solution will be found,” he added.

With regard to the current political context in Portugal, the minister regrets that the country is “very polarised in petty issues, in scandals” and speaks of a “hyper-partisanship”, but guarantees not to see “much of the effects of the political crisis” within the government and highlights the “strong leadership” of the prime minister, António Costa.

“He has great political talent and I think he is the most gifted politician of his generation. The issue for there not to be crises, or at least for crises not to have major effects, is the issue of leadership. Leadership distinguishes everything”, he said, warning: “I have absolutely no doubt, if there is any decision to hold elections, do not underestimate the prime minister’s capacity. He has shown it countless times.