Portugal's Bold Budget Bill: Tax Cuts and Surplus Ambitions

Portugal's centre-right government unveils its first budget bill, emphasizing tax cuts and a projected budget surplus. Despite concessions and potential political repercussions if the bill fails, the budget aims to boost growth, tackle emigration, and sustain public sector wages.

Portugal's centre-right minority government has introduced its inaugural budget bill, projecting modest growth and a small surplus even after implementing tax reductions and raising public sector wages. The government risks collapsing if the budget fails to pass, potentially leading to a third snap election in three years.

Finance Minister Joaquim Miranda Sarmento has sent the bill to parliament, comprising concessions like a minor cut in the corporate tax rate to 20% from 21%. This aims to avert a political deadlock. As Sarmento stated, the budget intends to reduce taxes for families, youth, and businesses while fostering economic performance and investment.

To curb youth emigration, young workers will receive a 100% tax exemption in the first work year. Expert opinions suggest the measure is cost-effective, weighing less on the budget. Amidst political negotiations, Prime Minister Luis Montenegro remains hopeful for budget approval, avoiding a crisis.

(With inputs from agencies.)