The Minister of State and Finance, Joaquim Miranda Sarmento, defended this Friday, October 24, that “using the Social Security balance for permanent increases is a mistake”, referring to a PS proposal to increase the lowest pensions.
“We should not use Social Security balances, which are intended to strengthen sustainability in the medium and long term, to make permanent increases in pensions”, reiterated the minister, at the hearing as part of the general assessment of the State Budget proposal for 2026 (OE2026).
The minister pointed out that the Government used the budget margin to “make an extraordinary payment to pensioners” with lower pensions.
At issue is the PS’s intention to propose that the extra balance in the Social Security budget be used to permanently increase the lowest pensions, as announced by the party’s general secretary, José Luís Carneiro.
In the closing speech of the PS Parliamentary Days, in Penafiel, district of Porto, José Luís Carneiro accused the Government of a “systematic failure” in forecasting the Social Security balance, a “hidden cat with its tail hanging out” in the State Budget, which he estimated at one billion euros.
However, the question about pensions came from Chega’s bench and not from the PS, which the minister highlighted by pointing out that “the PS did not want to talk about the secretary-general’s proposals on increasing pensions through a Social Security balance that in August was changed or influenced by transfers from the central administration”.
“The Social Security balance in August increased by one billion, but around 600 million euros resulted from a transfer from the central administration for the payment of the extraordinary pension supplement in September and for the reinforcement of the Solidarity Supplement for the Elderly and other expenses”, he explained.
Miranda Sarmento thus highlighted that the Social Security balance “is increasing by around 400 million euros and not what José Luís Carneiro said and which would allow for a structural increase in spending”.
José Miranda Sarmento, Minister of State and Finance
Tiago Petinga/Lusa
Public Accounts
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IRS reduces €500 million per year
The Minister of Finance stated that, after the reduction of the IRS in 2026, the Government intends to continue reducing the tax between 2027 and 2029, at a rate of 500 million euros each year.
OE2026, he said, brings the fourth reduction in the IRS “in the space of a year and a half”, after the reduction at the beginning of 2024 (by the previous PS Government, led by António Costa), the reduction in the middle of that year (by the first PSD-CDS-PP Government, led by Luís Montenegro), the update of the levels in the OE for 2025 and the change in rates in July this year.
“We will continue in 2027, 2028 and 2029 at a rate close to 500 million each year and, therefore, seeking to continue to alleviate the tax burden on families”, he stated.
“We want to continue reducing the IRS. We have in the 2025 election program a reduction of 2 billion in the IRS until the end of the legislature”, he stated, before clarifying how the portion of the reduction that remains to be fulfilled after 2026 will be distributed.
The distribution was mentioned by Miranda Sarmento following a question posed by PSD deputy Alberto Fonseca, who wanted to know whether the tax reduction was complete or whether it would continue in the coming years.
For 2026, the budget proposal brings a reduction in IRS rates by 0.3 percentage points between the 1st and 5th bracket, as predicted since July, when the 2025 IRS reduction was approved, by agreement between the PSD/CDS-PP and Chega. In the bill, the rates for the 1st, 6th, 7th, 8th and 9th brackets remain the same as in 2025.
In today’s debate, the minister considered that Portugal has “a significant reduction in the tax burden”, within the “possible” budgetary margin so as not to “unbalance public accounts and maintain a robust reduction in public debt”.
Miranda Sarmento said it is important that the country continues to reduce public debt, so that it remains below 80% at the end of the decade (2030).
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