The Socialist Government of Portugal presented its Budget project for 2023 on Monday, marking a wide distance from its Spanish counterpart.

Among other measures, it limits the average rise in pensions to 4% next year, half that of the Executive of

Pedro Sánchez,

alleging that it should not go further so as not to endanger "the sustainability of the Social Security system."

Inflation in Portugal is currently higher than in Spain

after reaching 9.8% in September, compared to 9.3% of the Spanish figure

advanced by the National Institute of Statistics.

The Government of

António Costa

has also decided, unlike Sánchez, to differentiate the increases and limits the increase to the highest pensions to 3.53%.

In section 2.4.1.1.

of the Budget details that the lowest will rise by 4.43% and the average, by 4.07%.

In addition, he details in the bill more than the Spanish the cost of this revaluation and puts it at 1,155 million euros for 2.7 million pensioners.

The Portuguese government, which suffered an EU bailout in the past decade, thus launches a more restrictive increase than Spain despite the fact that it has less deficit and even debt.

It expects a deficit of 0.9% of GDP in 2023 and a public debt of 110.8%

.

According to the Portuguese Finance Minister,

Fernando Medina

, this debt ratio takes Portugal for the first time "from the podium of the three most indebted countries", since the Spanish Government does not foresee less than 112% in 2023.

For the first time in the era of the euro, Portugal will improve Spain in the burden of debt

.

The Portuguese socialist minister remarked that this provides room for maneuver in case the crisis worsens and more help must be given to citizens and companies.

"We are prepared for more adverse scenarios," he assured.

The Budget also provides for tax relief that the head of the Treasury,

María Jesús Montero

, has not included in Spain, especially the so-called IRPF deflation.

“No worker is going to lose net salary due to taxes”

assured his counterpart Medina.

This thus complies with the income pact reached in Portugal this weekend and that forces the Government to discount inflation in the income tax brackets so as not to keep part of the wage increases that workers get.

The twelve-page agreement includes the "updating, in 2023, of the sections of the Personal Income Tax (IRS) with the criterion of nominal appreciation of the remuneration per worker (5.1%), and guarantee the principle of fiscal neutrality of salary updates'.

It is, according to PP sources, a review of the IRPF sections such as the one requested by the training of

Alberto Núñez Feijóo

in Spain.

In contrast,

Portugal does not announce any Wealth Tax on large fortunes or banking

.

It does foresee a temporary one on energy, but the Finance Minister has decided to wait for an agreement in the European Council.

The income agreement promotes a salary increase of 5.1% in 2023 and above 4% in subsequent years until 2026 with personal income tax adapted to these increases.

It also obliges the Government to reduce up to a rate of 17% the Corporate Tax for small and medium-sized companies that increase wages or prove investment in research and development.

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  • Portugal

  • personal income tax

  • Alberto Nunez Feijoo

  • PP

  • Maria Jesus Montero

  • GDP

  • INE

  • Social Security

  • Pedro Sanchez

  • Taxes