Portugal sees balanced budget despite new tax cut

Portugal’s finance minister said on Tuesday the government still expects to end the year with at least a balanced budget, despite announcing an additional personal income tax cut and an extraordinary payment for pensioners. The stance signals that Lisbon intends to preserve fiscal discipline while adding €800 million in support measures.

Joaquim Miranda Sarmento said the two measures — an extra IRS cut up to the sixth tax bracket and a new pensioner bonus — are backed by current budget execution data and should each cost about €400 million this year. He said more details on the IRS reduction will be presented next week when the proposal is sent to parliament, with the tax relief due to be reflected in November salaries.

The minister also pushed back against plans by Chega to submit bills next week to cut VAT on fuel and introduce a zero VAT rate on a basket of food products. In an interview with SIC Notícias, Sarmento said any further budget effort on fuel “is not affordable” on top of the measures already announced, and argued that EU rules would also prevent such a move.

Sarmento said the government only moved ahead with the two measures because it now has enough confidence in the budget figures to do so while keeping public finances “balanced, at the limit a zero balance”, unless there is “some cataclysm”. He argued that raising households’ disposable income is preferable to subsidising a specific product such as fuel.

Originally published at Eco.pt