PS Accuses Government of 'Gross Manipulation' of IRS Tax Tables Ahead of Elections
The Socialist Party (PS) has accused the Portuguese Government of implementing a 'trick' by altering the IRS withholding tax tables for August and September, alleging the move is a calculated effort to 'artificially increase the income of the portuguese' to secure more votes in the forthcoming local elections. The accusation was made today by António Mendonça Mendes, deputy and vice-president of the PS Parliamentary Group, in statements provided to the Lusa news agency. He described the measure as a 'gross manipulation' of the tax system, designed to mislead voters just weeks before they head to the polls on October 12.
According to the Socialist deputy, the temporary decrease in tax withheld from salaries does not reflect the actual tax reduction approved by the Assembly of the Republic. 'What we are witnessing is a two-phase trick by the Government,' Mendonça Mendes stated, explaining that the perceived income boost is temporary and will be reversed after the elections. He warned that from October, citizens will 'feel that the tax cut was, after all, insignificant and that their salary is practically the same as they had until July.' This creates a false sense of financial improvement timed specifically to influence electoral outcomes, according to the opposition party.
The primary concern raised by the Socialist Party involves the consequences for the annual tax declaration in April of next year. Mendonça Mendes cautioned that the lower withholding rate now could lead to a significant number of taxpayers facing an unexpected tax bill, rather than the customary refund. 'When April arrives, they will realize that, in most cases, taxpayers will start paying IRS,' he warned. This could disrupt the financial planning of many households that rely on the annual IRS refund for significant expenses. The party is urging citizens to manage their finances with 'great caution' during this period.
Mendonça Mendes pointed to simulations from financial consulting firms that support the party's conclusion, stating that the consensus is that 'the Portuguese will start paying IRS from next year and this reduction in August and September is artificial.' He directly appealed to the public: 'We want to ask the Portuguese not to be fooled.' He advised that anyone counting on a tax refund for their family's cash management should be aware that the extra income received now may be required to cover their tax liability in 2026.
The accusation was further fueled by recent remarks from the Minister of Economy, Castro Almeida, at a PSD party event. The minister had expressed confidence that the Portuguese would continue to support the government if they 'feel they have more money in their pockets.' The Socialist Party interpreted this as a candid admission of the government's strategy. 'I think Castro Almeida told the young social democrats what the government's strategy is, which is to put money in the pockets of the Portuguese to win votes,' Mendonça Mendes commented, adding the critical caveat that 'in this specific case, the money they are putting in the pockets of the Portuguese is money that will be taken from them in a few months.' The debate over fiscal policy and its political motivations is expected to remain a central theme as the local elections approach. Understand policy impacts on your Portugal property plans at realestate-lisbon.com.
