Montenegro says government has unveiled a proposal that PS ‘cannot refuse’
Prime Minister Luís Montenegro unveiled on Thursday a State Budget proposal that he believes “cannot be refused”, aimed at winning support from the Socialist Party (PS). Following a 30-minute meeting with PS Secretary-General Pedro Nuno Santos, Montenegro presented a tax plan that includes a slight corporate tax cut and significant changes to the Youth IRS scheme.
Speaking after the meeting, Montenegro explained: “I just presented to the PS a framework for aligning on tax matters, specifically regarding corporate tax (IRC) and Youth IRS.”
He highlighted that the government is proposing a modest reduction in corporate tax, halving the originally planned cut to just 1%. This reduction is paired with key suggestions from the PS, including incentives for companies to invest in employee wages and company capitalisation, as well as lowering autonomous taxation on vehicles.
The real focus, however, is on Youth IRS, where Montenegro announced the government’s decision to move closer to the PS’s model. “We agreed to adopt the PS model from the 2024 budget, with three adjustments that reflect the PS’s electoral platform.”
Key changes include expanding the Youth IRS program to apply universally, rather than being limited by academic qualifications. Montenegro proposed extending tax benefits for young workers: a 100% tax exemption in the first year of employment, 75% from the second to fifth year, 50% from the sixth to ninth year, and 25% from the tenth to thirteenth year. This effectively extends the tax relief period from five years to 13.
Montenegro emphasised that these changes align with the government’s goals of boosting the economy, attracting foreign investment, and creating favorable conditions for young workers. “This approach extends the scope of Youth IRS and increases the duration of tax exemptions, creating better conditions for young people and ensuring a positive economic impact,” Montenegro summed up.
The revised plan is estimated to cost €645 million, significantly lower than the €1 billion initially projected by the government.
“We want to avoid elections” – PS leader
Speaking to reporters this Friday morning, PS leader Pedro Nuno Santos said the party is committed to avoiding early elections and doing everything it can to pass next year’s budget.
As he left PS headquarters – where he had been since leaving the late afternoon meeting with prime minister Luís Montenegro – Pedro Nuno Santos was asked by journalists about the party’s counter-proposal to the one submitted today by the government.
“We want to avoid elections and we want to avoid the budget being cancelled. We’ll make our contribution,” replied the PS leader, on his way to his car, refusing to comment further.
