Lisbon, June 27, 2025 (Lusa) - Portugal's president said on Friday that the income tax cut proposed by the government “could facilitate positive effects" in 2026 and that the financial situation allows for this “boost to the economy” and, at the same time, investment in defence.
Leaving the Belém Cultural Centre in Lisbon, when questioned by journalists about the defence investment commitments made within the framework of NATO, Marcelo Rebelo de Sousa focused on “the present” and the target of 2% of Gross Domestic Product (GDP) by the end of this year, arguing that “it's feasible”.
“I see that a reduction in income tax (IRS) has just been announced, among other social measures, which signifies that there is a margin in the state budget, meaning, therefore, a financial climate, which allows, on the one hand, to look at the social reality and the stimulus to the economy, and, on the other hand, to comply with the 2%”, he declared.
Asked about the reduction in income tax rates down to the eighth bracket proposed by the Government, the Head of State stressed that “it was an electoral commitment” of the Democratic Alliance coalition (PSD/CDS-PP).
“The Portuguese voted, the new government took charge, and, therefore, it will fulfil that electoral commitment from the last legislative elections. The experience we have, notably in relation to what happened in previous years, is that careful management, with the financial capacity to do so, can allow useful effects next year”, he considered.
The country’s president stressed that “there are structural funds that until this moment have a degree of execution around 8 billion euros” from the Recovery and Resilience Plan (PRR), and that the seventh tranche of funding “will reach €13 billion".
“The implementation scheme, involving various state-linked structures, is one that I believe will speed up delivery on the ground, with a longer deadline and a projection for the end of this year, but above all for next year,” he continued.
According to Marcelo Rebelo de Sousa, “next year will be a year of great challenges”.
“Following, the question is another, it starts to be Portugal 2030. It is another mechanism of European funds, this one is more delayed, has a longer deadline, but also has less attractive conditions, because the entry of European funds is not 100%, it is less”, he referred.
“So, I would say that the synthesis of this is doable, but the test year, at the end of this year, is very important, but the test year will be 2026”, he reinforced.
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