But IRS Jovem ‘dependent’ on government’s survival into 2025
IRS Jovem – the ambitious plan to slash income tax for the under-35s, and so encourage younger citizens to remain in this country instead of emigrating – is to be approved by the Council of Ministers today.
That is the ‘good news’.
The ‘not so good news’ is that IRS Jovem is dependent on the minority government’s survival into 2025 – and its ability to pass a State Budget in November.
On the basis that all that happens, young people under the age of 35 will be able to look forward to paying a maximum of only 15% on their earnings in IRS, from January 1 next year.
Any young people who earn over €80,000 a year will not qualify, but below that amount, ‘savings’ will be on a sliding scale (the least well paid young people already exempt from IRS contributions).
IRS Jovem is part of the government’s ‘good news strategy’ designed to weather the icebergs of precarious minority. But whether it actually works is another question. And that is without the rumblings over why it is only the under-35s benefiting from a drop in the level of income tax contributions.
Correio da Manhã’s deputy editorial director general Armando Esteves Pereira stresses today that “in an ideal world, all taxpayers deserve a similar reduction because the weight of direct taxes on earnings in Portugal is abusive.
“A middle bracket salary, a few hundred euros above the minimum wage, is already taxed at a level which in other European countries relates to a rich person.
“Portuguese citizens who work or receive pensions pay a significant proportion of their earnings every month to the tax department – a great deal more that the truly rich who have tax planning schemes and offshores to release them from these heavy burdens”.
To complicate the picture further, the strong-arm tactics employed by ‘the minority parties’ are ensuring that the government strategy for generalised reductions in income tax payments are being delayed. These too were to have been ‘approved’ by the Council of Minister today, but PS Socialists used what is termed a “potestative request” to suspend the meeting in which the measure would first have to be voted on by the Commission for Budget and Finances.
Former Secretary of State for the Treasury António Mendonça Mendes described the move as a way of “holding the government hostage” to avoid “precipitous decisions”. (This is in keeping with PS Socialists’ strategy to couch blocks on government business in such a way as to make them look helpful – when the government’s retort is that they are simply acting as obstacles because they can.)
natasha.donn@portugalresident.com
