Portuguese PM Unveils Cost-of-Living Measures, Decides Against VAT Cuts

PORTO — Portuguese Prime Minister Luís Montenegro announced a comprehensive set of measures aimed at alleviating the rising cost of living on Thursday. During a press conference in Porto, the head of government outlined initiatives designed to support families and workers without altering the country’s value-added tax (VAT) structure.

Montenegro emphasized that the government remains committed to maintaining low corporate taxes to stimulate job creation and attract foreign investment. “We are resolute in our policy to maintain low corporate taxes in order to generate employment and invest in innovation,” he stated, according to Publico.

The Prime Minister rejected proposals from the Socialist opposition to reduce the standard VAT rate from 23% to 21%. Speaking during a live broadcast on Portuguese television, Montenegro argued that raising tax revenue through higher consumption taxes is not a viable solution for the country’s economic challenges.

According to data released by the National Statistics Institute (INE), consumer prices in Portugal increased by 2.5% in August compared to the same period last year. The figure represents a slight deceleration from the 2.7% annual inflation rate recorded in July.

In response to these economic pressures, the government has introduced several targeted relief measures. These include an increase in the basic state pension, adjustments to social support payments, and enhanced benefits for unemployed individuals.

Montenegro also highlighted recent legislative changes affecting the construction sector, where workers now receive a minimum daily wage of 50 euros. Furthermore, employers will be required to provide written contracts and specify working hours as part of ongoing efforts to formalize labor relations and protect worker rights.