Portugal’s New Prime Minister Announces Tax Cuts
In a significant move to invigorate the Portuguese economy, the newly appointed Prime Minister Luis Montenegro has unveiled a series of tax cuts in his inaugural address to the nation’s parliament. The centre-right leader, who assumed office on April 2 after his Democratic Alliance party emerged as the largest bloc in the March 10 elections, is steering the government without a parliamentary majority.
Montenegro’s economic strategy includes a substantial income tax reduction amounting to 1.5 billion euros, aimed predominantly at benefiting middle-income earners. Additionally, he has laid out a plan to decrease corporate taxes from the current rate of 21 percent to 15 percent over the next three years. These fiscal adjustments are part of a broader effort to stimulate business growth and attract investment.
The prime minister also highlighted measures to improve the efficiency of state operations. These include shortening the duration for state payments to suppliers and expediting investment projects that benefit from European Union funds. Furthermore, Montenegro has initiated salary negotiations with educators, signaling a commitment to address public sector concerns.
Despite the absence of a majority, Montenegro’s program is set to pass with the abstention of the Socialist party, which held power since 2015. However, this support comes with caveats, as the Socialists have expressed their intention to contest many of the government’s proposals. Socialist leader Pedro Nuno Santos has voiced skepticism about supporting a government that seeks to overhaul policies established by his party. He also indicated that backing for the government’s 2025 budget could be unlikely.
The political landscape in Portugal has been further complicated by the rise of the far-right Chega party, which made significant gains in the recent elections. As Montenegro’s government embarks on its mandate, it faces the challenge of navigating through a fragmented parliamentary scenario while delivering on its promise of change and economic rejuvenation.
