The Portuguese Government faces its first crisis for announcing a tax reduction inherited from the socialist Costa

The first political crisis of the minority Government of Portugal occurred a few hours after its management program received the green light in Parliament. The entire opposition demands accountability from the Prime Minister, Luís Montenegro (Social Democratic Party, PSD, center-right), for having announced in his first speech before the Chamber a tax reduction in personal income tax - in Portuguese it is called IRS - for this year of 1.5 billion of euros, when hours later it was discovered that 88% of this reduction is already planned in the 2024 State Budget approved by the Executive of socialist António Costa. The new Government will only add around 200 million to the 1,327 million cut by Costa's previous team in income taxes. What the Montenegrin cabinet incorporates again is the extension of the tax reduction to higher income brackets, which will also allow those who earn up to 81,199 euros per year to benefit (discounting the individual annual deduction of 4,104 euros).

Recriminations against Montenegro came from the right and the left. “This is not a fiscal shock, it is a fiscal touch-up,” lamented Rui Rocha, leader of the Liberal Initiative, the party most likely to reach an agreement with the government of the conservative Democratic Alliance, the coalition that narrowly won the elections in March and who headed the PSD of Montenegro. “The Government's state of grace ended after 48 hours,” said Rocha.

From the left, the criticism was harsher. The president of the socialist parliamentary group, Alexandra Leitão, considered that the announcement had been “brazen.” “For those who talk so much about loyalty and trust, this is total proof of the lack of credibility of this Government,” the former minister rebuked during an intervention at the party headquarters held this Saturday. The socialists are going to ask in the Assembly of the Republic for an urgent debate with the Minister of Finance, Joaquim Miranda Sarmiento, to clarify the fiscal plan, while Chega, the far-right party that has 50 deputies, wants him to appear in the commission of Budgets and Finance. It was precisely Minister Miranda Sarmiento who clarified the accounts in a television interview by explaining that the 1,500 million announced by Montenegro were not added to the 1,327 million that Costa had already reduced.

Mariana Mortágua, the leader of the Left Bloc, described the Government's announcement as a “lie” in a tweet. “The only promise that does not invite jokes is the reduction of the corporate tax on the profits of large companies,” she wrote. This rate will be lowered from the current 21% to 15%. In this way, all Portuguese companies will start trading only with the mandatory minimum required of multinationals by the European Commission since January 1.

Not only has the opposition attacked the Government, but also the director of the weekly

Expresso

, João Vieira Pereira, published an unusual article apologizing to his readers for his erroneous Friday cover, which opened with this headline: “Montenegro doubles the decrease in personal income tax before summer.” “The personal income tax reduction that Luís Montenegro announced with pomp and circumstance, the tax reduction that he defended in the electoral campaign, is ultimately false. They are just small adjustments to the reduction already announced by António Costa for this year's budget,” he wrote.

In a statement, the Government defended the prime minister's words as truthful. At Thursday's plenary session, Montenegro said the following: “Next week we will approve a bill that will introduce a reduction in personal income tax rates on all income up to the eighth tranche. This measure will imply a global reduction of nearly 1.5 billion euros in personal income tax compared to last year, with a special focus on the middle class.”

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In its text, the Government insists that the prime minister's announcement responds to what appeared in the Democratic Alliance's electoral program and attacks both the opposition and the press. “The attempt to disguise one's own errors of interpretation, calculation or fiction with incorrect imputations to others deserves repudiation,” the Executive maintains in its note.

Luís Montenegro meets this Monday in Madrid with the Spanish president, Pedro Sánchez, in his first international meeting after taking office. The central issue will be the conflict in the Middle East, aggravated over the weekend with the escalation between Iran and Israel. In the preparatory debate of the European Council, the Portuguese Prime Minister affirmed that he views Palestine's claim to acquire full member status in the UN "favorably" and defended the two-state solution, in line with the traditional Portuguese foreign policy. Although without sharing the Spanish position of immediately advancing the recognition of Palestine as a State. “To be very clear, the Portuguese Government defends an immediate ceasefire that allows for humanitarian aid, respect for all international law and, obviously, so that negotiation can take place with a view to lasting peace,” he said.

With his visit to Moncloa, the prime minister wants to highlight the strategic importance of relations with Spain, the main trading partner, and advance in the preparation of the next Iberian summit.

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