Portugal's State Budget 2016, the debate starts on Monday

Portugal's 2016 State Budget is to be debated in parliament on Monday 22nd February, with the Greens already backing it but with no definite news yet from the Left Bloc or the Communists as to which way they will swing.

The Socialist Party will need the support of its left-of-centre allies to get the document through and as the budget veers towards an anti-austerity agenda, albeit curtailed after tense meetings in Brussels to get European approval, there should be no question of the Prime Minister António Costa being left high and dry, at this stage anyway.

The discussion is expected to go on for two days after which there will be a vote, allowing the head of the opposition, Pedro Passos Coelho, time to rally his MPs and firmly reject the budget which he already has called infantile.

The Left Block is pretty sure to vote the budget through even though “is not the budget of the Left Bloc, but the Socialist Party’s."

"On the whole, the State Budget goes against the trades made with the Left Bloc but it does allow for a rise in income for the first time in five years and therefore the Left Bloc will not vote against the budget," said its leader Catarina Martins on Sunday.

The two main parties that support the government, the Communists and the Left Bloc, want to introduce changes to the budget, including lowering property rates, freezing tuition fees, the widening of the social tariff for electricity and fixing education deductions for income tax relief.

Costa has remained open to considering these amendments but insists that the overall impact of any inclusions from the left must not increase the deficit forecast for this year of 2.2% of GDP.

The main area of conflict will be the overall tax burden. The government claims that it will go down, while the opposition PSD and CDS-PP parties say it will rise.
 
As for economic growth, the government expects the economy to grow 1.8% this year, a more conservative estimate than the one contained in the first draft budget which showed an estimate of 2.1%.

The main policies include a gradual replacement of civil service salaries during 2016 and a reduced surcharge on personal income tax, both measures by which the Government intends to return part of the income that households have lost during the austerity period.

The budget document also provides for indirect tax increases, particularly vehicle tax, oil products tax, six cents on petrol and diesel, and rises in tobacco and alcoholic drinks tax.

The government does want to increase fixed deductions for each dependent child, the rate depending on the household's income.

The Income Tax rate is expected to stay at 21% for 2016.

After the debate and vote, the budget is passed on for yet more debating with a final vote scheduled for March 16th.

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