The Minister of Finance, Joaquim Miranda Sarmento, warned that the cost of a reduction in VAT on fuels would be unsustainable for public accounts, after the Government announced an additional IRS cut and an extraordinary supplement for pensionists. The warning came after the Chega party announced it would present proposals next week to reduce VAT on fuels and advance with zero VAT on the food basket.
The two measures announced by the Montenegro Executive have a total fiscal impact of 800 million euros this year, with each costing approximately 400 million euros. The minister stressed that Parliament cannot expect that, after these measures, an additional budgetary effort on fuels will be made, also warning that this would be contrary to the EU directive, citing the example of Spain which had to reverse a similar reduction due to pressure from Brussels.
Miranda Sarmento added that budget execution allows the Government to advance with these measures and, unless there is some "cataclysm," maintain balanced public accounts, at the limit with a zero balance. The minister defended that increasing the income of people and pensioners is preferable to subsidizing specific goods, arguing that Portuguese people prefer to have more of their own income to decide how to allocate it in their consumption.
