Key points from the government’s state budget for 2023

Le Portugal condamne les attaques de missiles russes de ce matin sur Kiev et d’autres villes ukrainiennes

Experts and experts warn that the government’s macro forecasts are ‘unrealistic’

With so many pundits, pundits and opposition politicians warning of the ‘unrealistic’ basis on which Portugal’s PS government has based its national budget for 2023, the key points of the document presented today by Finance Minister Fernando Medina are as follows:

  • Economic growth next year of 1.3%
  • Inflation (from 7.45% this year) fell to 4%
  • A deficit of 0.9% and a public debt of 110% of GDP
  • €52 annual pay rise for public sector workers – this varies in percentage for pay scales, with the lowest seeing an 8% increase, with the percentage decreasing as wages rise
  • Meal allowances (which are part of the salary) go from €4.77 per day to €5.20
  • Pensions are increasing as previously announced
  • The minimum wage has been increased from €705 to €760 (with a new agreement with the social partners determining annual increases until the end of this legislation)
  • Selective reduction of IRC (taxes paid by companies): this idea is to allow companies that increase wages to benefit from the 5.1% agreed with the social partners by reducing their contribution to the IRC
  • Strengthening of the program for the sector of tourist rentals, restaurants, etc
  • Additional support for farmers with a 10% discount on every liter of agricultural diesel
  • Changes on the scale of the tax administration (income tax) – to meet the 5.1% wage increases agreed with the social partners and to help increase family incomes (giving higher child benefits, etc.)
  • Crypto profits remain untaxed for another year (despite recent rumors that they will start being taxed…) as long as those who earn them hold their currency for more than a year. In cases where profits are made on newer currencies, the tax should be 28%, as they are considered more “speculative” in nature
  • Municipalities will receive up to 1.204 billion euros through the FFD (decentralization financing fund)
  • The IRS has “benefits” for taxpayers who generate their own energy (and sell to the national grid)
  • Tax benefits for younger taxpayers, allowing them to keep more income, on a sliding scale (50% the first year, 40% the second, 30% the third…)
  • Compensation of the Tax Administration for landlords who are prohibited by law from raising the rent by more than 2% in 2023 (amount not specified)
  • Additional grants for student accommodation
  • A strengthened budget for the health sector (which will receive 14.858 billion euros this year, which is an increase of 7.8% compared to the 2022 budget)

Many soundbites today focus on the cost of government measures and/or how difficult government has been.

For example, the airport authority ANA would request 214 million euros as part of the “repositioning of the financial balance” – “but the state refused it”, writes Expresso.

Such details spice up today’s announcement: energy support, for example, will cost the state 500 million euros; spending on the environment and climate measures will cost the state 1.7 billion euros; support to farmers will cost 40 million euros – and will benefit 145,000 of them; maintaining transport costs at their level will cost 66 million euros.

The document was previously released with all the fervor of the Oscars.

It is the first “full ownership” budget of the Minister of Finance Fernando Medina (the last one was largely the work of his predecessor), and he aims to “halve the country’s deficit by 2023”, and his ambition is to satisfy investors, lenders and international financial institutions. including rating agencies, by removing Portugal from the “black list” of EU countries with the highest public debt.

It all really depends on whether his predictions fit the bill – and that’s where it could all fall apart so quickly (if they don’t).

For now, the document will be debated in parliament at the end of this month (October 26 and 27), and the final vote is expected on November 25.

President Marcelo will meet tomorrow (Tuesday) with all parties in parliament to hear their opinions on the document.

Fernando Medina previously said he didn’t expect much enthusiasm from the opposition for the government’s spending forecast – and that’s one forecast he seemed certain to hit a thousand.

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