Portuguese prime minister outlines plan to tackle rising living costs without changing VAT

On Thursday evening, Portuguese Prime Minister Luís Montenegro addressed the nation, outlining a plan to address the rising cost of living without altering the Value Added Tax (VAT). The plan, which includes a pension bonus and a reduction in income tax bands, has been officially approved by the Council of Ministers. Montenegro detailed the pension bonus, which will range from 100 euros for pensions up to 1,611 euros to 200 euros for those with pensions up to 537 euros. The pension supplements will be paid in December.

In response to rising fuel prices, the government will continue its discount on petroleum products (ISP) tax, which will reduce the tax by around 1.3 billion euros this year. Montenegro hinted that this discount could increase to 25 cents per liter as early as next week due to further fuel price increases. The government also plans to support sectors heavily impacted by fuel costs, such as taxis, freight transport, and social solidarity institutions, with a total package of 38 million euros.

Additionally, the green rail pass will now cover urban areas in Lisbon and Porto, allowing travel on all rail lines except the Alfa Pendular high-speed service.

However, Montenegro firmly stated that the government will not change the VAT, as demanded by the Socialist Party and Chega. This strategy, which has been adopted by several European countries, will not be traded for the VAT policies of other countries, including Spain, France, or Italy. Montenegro reminded the nation of the international bailout Portugal faced in the past, warning that the current situation may persist and that there will be no illusions with a heavy price to pay in the future.