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The Government kept a measure of the next State Budget secret, not even the left partners gave the news. But in the 12-hour Council of Ministers last Thursday, a proposal was closed that will increase the disposable income of two million Portuguese: there will be a reduction in the withholding rate at origin for all workers (in practice, and without lowering taxes or jeopardizing state income, is a way to increase the salary received at the end of the month, but that will be offset by a smaller refund to the IRS the following year). This measure was not on the list sent to the former partners this week, with all the commitments that the Government is willing to assume, either in the State Budgets, or in a multi-year period. The measures indicate progress, but do not respond to all the requirements of PCP and BE. “Insufficient”, says the BE, which counts at least nine (out of 19) without a counterproposal from the Executive. One of the things that saw the green light was the increase in unemployment benefit by 60 euros for those who discounted the minimum wage.
No major changes in taxes are expected in this Budget. The IRS was supposed to be the star this year, but the pandemic fueled the promised moves in the ranks later. However, of the measures that the Government decided on its own, without being a leftist response, there are exactly two that interfere with taxation: together they are worth 200 million euros (in the case of the IRS, it is anticipation of the tax recovered later in 2022 ) and are aimed at an immediate increase in disposable income, the objective is to increase domestic consumption. Last week, António Costa announced the VAT refund for those who consume in restaurants and hotels in January. This, along with reducing the IRS source withholding rate for all married and single dependent workers, including divorcees and widowers, not including green receipts, will mean 200 million less income for the state in the public accounting. The IRS portion will have no impact on the deficit, calculated in national accounts.
