This hearing in the Committee on Budget, Finance and Public Administration (COFAP) was requested by Chega and was voted in favor by all parties, including the PSD, while the Livre abstained.

Miranda Sarmento's debut in COFAP is due to the controversy surrounding the reduction of the IRS, announced by the executive led by Luís Montenegro, with Chega wanting to question the minister in charge "about what effective reduction in IRS the Government actually proposes to make, and what the real impact will be on Portuguese families".

The announcement about the tax relief was made by the prime minister at the start of the debate on the program of the Constitutional Government, during which he announced "the reduction of IRS rates on incomes up to the eighth bracket, which will amount to an overall decrease of around 1,500 million euros in Portuguese workers' income taxes compared to last year, particularly felt in the middle class".

A day later, on April 12, in an interview with RTP, the Minister of Finance clarified that the 1,500 million euros of IRS reduction this year announced by Luís Montenegro will not be added to the more than 1,300 million euros of tax relief included in the State Budget for 2024 (OE2024) and already in force.

Opposition parties then accused the Government of trying to deceive the Portuguese.

The Government, in a statement, considered it "true and undeniable" that the IRS reductions will lead to a cut of 1,500 million euros compared to 2023 and argued that greater reductions in IRS rates would be "budgetarily irresponsible".

Subsequently, the executive updated the data on the tax reduction in force since January, from 1,327 million euros to 1,191 million, due to the 2022 declarations submitted in 2023.

The IRS reduction envisaged in the OE2024 and whose impact was accounted for in the aforementioned 1,327 million euros includes the updating of the brackets at a rate of 3%, the increase in the tax-free amount (minimum existence) and the reduction of rates in the first five brackets between 1.25 and 3.5 percentage points.

The Government's proposal, approved by the Council of Ministers, contemplated a reduction in rates between 0.25 and three percentage points up to the 8th income bracket, with the largest reductions (three and 1.25 points) falling, respectively, on the 6th and 8th income brackets.

This Wednesday, during the fortnightly debate with the prime minister, the leader of the PSD parliamentary group, Hugo Soares, announced that his party had presented a text to replace the Government's proposal, approaching what the PS, Chega and BE defend in relation to the rates that fall on the brackets and in the specific deduction, also recommending that the Government consider extending the deduction of the extension of the deduction of expenses on loans for buying a house.

With regard to rates, the PSD proposes an additional reduction of 0.5 percentage points in those that fall on the 3rd and 4th income brackets, which thus drop to 22% and 25%, respectively, i.e., equal to what the PS defends.

Regarding the 6th bracket, the PSD argues that the rate should be reduced to 35%, i.e., one percentage point less than the Government proposed, and the changes in this income bracket -- which corresponds to gross salaries between around 2,200 euros and 3,100 euros -- motivated strong criticism of the PS, which defends maintaining the rate for this bracket (36.5%).

With this project, the PSD also comes closer to the rate scheme defended by Chega, although the party led by André Ventura defends a steeper reduction in the rate of the 6th bracket (to 32%) and of the 5th bracket (to 31.5%).

The PSD's proposal also opens the way for updating the limit of the income brackets according to inflation and the GDP growth rate per worker, ensuring that this formula is used "unless otherwise provided for by a legislative act that specifically amends" the article of the IRS code that defines the brackets.

At the time of approval in the Council of Ministers, the executive stated that the bill will bring additional relief of 463 million euros (348 million euros this year, to which 115 million euros should be added in 2025, via reimbursement), but the amount should now be something of a review compared to the project presented by the PSD.

The PS accused the Government of focusing tax relief (accounted for in 348 million euros in 2024) on higher incomes, leading the socialists to put forward an amendment proposal that focuses the most significant part of the relief on lower brackets.

The other parties also presented different proposals for the IRS reduction, having been reduced to the specialty, where they have been discussed.

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