Greatly income tax reduction for more than 300,000 citizens, aged between 18 and 35, reducing by 2/3 the average tax rate they will pay from next year, the government of Portugalin order to reverse the brain drain.
Prime Minister Luiz Montenegro said that “the vast majority will pay something between 4.4% and 7%-8%”, while the maximum tax rate for all young people earning up to 5,800 euros per month will be 15%. Currently, income tax rates vary between 13% and 48% across all salary ranges.
“Hope for young Portuguese people”
The measure must be approved by parliament, where the center-right coalition government that came to power after the March 10 elections does not have a majority, but most opposition parties are calling for such tax cuts, which would make it easier approval of the measure.
“We give young Portuguese people more hope to stay in Portugal. We need them here… it is possible to reverse the trend (of immigration) that has unfortunately worsened in recent years”, highlighted the Prime Minister at a press conference.
He added that this tax reduction would cost the State coffers around one billion euros per year.
According to the Migration Observatory, around 850 thousand young people, or 30% of citizens aged between 15 and 39, left the country -one of the poorest in Western Europe- for some time and have been living abroad, due to poor working conditions and low wages.
The government will also provide young people with a government guarantee, which can cover up to 15% of mortgages worth up to 450 thousand euros, as many do not have enough savings to make the initial payment required by banks, exempting them from municipal taxes.
The government had already announced income tax cuts for the middle class of 1.5 billion euros compared to 2023 levels.
Sources: AMPE, Reuters