By: CHRIS GRAEME
GOVERNMENT MEASURES announced to fight the economic crisis should generate an extra 20 million euros for the state’s coffers.
Extra help announced by the Prime Minister in parliament last week in areas such as housing, education and transport combined with a new tax on petrol companies, should generate a positive balance of around 20 million euros for the state budget.
Câmaras could see their accounts penalised to the tune of 100 million euros while an increase in IRS income tax deductions to offset mortgage interest rates are likely to set the state back 40 million euros.
A package of social measures for schools will cost a further 30 million euros while new taxes on petrol companies will bring in 100 million euros.
The estimates were made by the Prime Minister José Sócrates during his State of the Nation Address in parliament on Thursday, July 10.
As of 2009, 400,000 primary school pupils from low income families will get free school books and free school meals. Children and young persons under 18 can also apply for a school pass which will guarantee them a reduction in monthly public transport costs by 50 per cent.
Property tax
The maximum limits for the municipal property tax, Imposto Municipal Sobre Imóveis (IMI), will be reduced this year from 0.8 per cent for new houses and properties not bought and sold since 2003 to 0.7 per cent and from 0.5 per cent to 0.4 per cent for all other properties.
Of 308 municipal councils nationwide, 133 charge the maximum tax possible under the law and will now have to reduce it.
IMI exemption periods will also be increased for some council tax payers from six years to eight years for properties worth up to 157,500 euros, and from three years to four years for houses worth between 157,500 euros to 263,250 euros.
With these two alterations to the IMI, the government predicts an increase in revenue to the tune of 50 million euros.
Municipal Câmaras have slammed the new IMI property tax changes claiming it will reduce their abilities and powers at a local level.
IRS deductions
An increase in taxable deductions on property expenses will include families with taxable income of up to 40,000 euros.
At present each family can deduct 30 per cent of household expenses to a limit of 586 euros. Now the limit will be 879 euros for tax payers in the first and second IRS tax brackets (incomes up to 7,017 euros per annum), 703 euros for those in the third tax bracket (incomes up to 17,401 euros per annum) and 644 euros for tax payers in the fourth tax bracket (40,020 euros).
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