Portugal Unveils €1.3bn Cost-of-Living Plan
Prime Minister Luís Montenegro announces 200-euro pension bonuses and tax cuts to support middle-class households
Portuguese Prime Minister Luís Montenegro has outlined a plan to tackle the rising cost of living, including measures such as a pension bonus and a reduction in personal income tax bands. The plan aims to support middle-class households and sectors most exposed to rising fuel prices.
The pension bonus will be 200 euros for pensions of up to 537 euros, 150 euros for pensions up to 1,704 euros, and 100 euros for pensions up to 1,611 euros. The payment of the pension bonus will be made in December.
In addition to the pension bonus, the government will cut taxes across six IRS bands, with the remaining bands also affected due to the progressive nature of the tax. This measure is aimed at supporting middle-class households.
The government will also continue to implement a discount on the tax on petroleum products (ISP), which will remain in place until the end of the year, amounting to a total reduction of around 1.3 billion euros. Furthermore, the government will support sectors most exposed to rising fuel prices with a total budget of 38 million euros.
Other measures include the extension of the green rail pass to the urban areas of Lisbon and Porto, costing 20 euros a month.
## Why it matters The plan is a response to the rising cost of living in Portugal, particularly triggered by the increase in fuel prices. The government's decision to keep VAT unchanged sets it apart from other European countries. The measures announced by Prime Minister Montenegro are intended to provide relief to middle-class households and support sectors most affected by rising fuel prices.
The success of the plan will depend on its implementation and approval by the Assembly of the Republic. The government's ability to support households and businesses affected by the rising cost of living will be crucial in the coming months.
## What happens next The draft law outlining the tax cuts and other measures will need to be approved by the Assembly of the Republic. The government will also continue to monitor the situation and adjust its measures as needed to support households and businesses.
The plan is a significant step towards addressing the rising cost of living in Portugal, and its impact will be closely watched in the coming months.
