Luís Montenegro rejects the counterproposal presented by Pedro Nuno Santos. The socialists had proposed transforming the transversal decrease in the IRC into a tax credit for investment, but the Government has no intention of doing so, understanding that it is now important to make a structural and lasting change in the tax.
The information was initially provided by SIC Notícias and confirmed by Observador with a source from the Executive. Furthermore, this decision was already early given the first reactions of the hardest core of Montenegro as soon as Pedro Nuno Santos’ proposal became known. At that moment, as the Observer explained, the reading was immediate: “Pedro Nuno preferred early elections to lowering the IRC by 1 percentage point,” stated a PSD source.
On Friday night, top government officials made statements to this effect. Hugo Soares, parliamentary leader of the PSD, spoke of “disloyalty“. Manuel Castro Almeida, Vice Minister, said that it would be “difficult“To the Executive to accept the intentions of the PS. Paulo Rangel, Minister of Foreign Affairs, said he was “unacceptable“. And, finally, Pedro Duarte, Minister of Parliamentary Affairs, left the fragment of the night, which in fact would be repeated this Sunday by Hugo Soares himself. “The Government moved a mountainbut the PS has not yet abandoned Largo do Rato.”
Now, Luís Montenegro ends up closing the door on Pedro Nuno Santos in this chapter, and it is still not known with certainty what will happen from now on. Let us remember that the socialist had proposed two alternatives for the IRC: the PS agreed to reduce the IRC by 1 percentage point, but condition assumed that the Government don’t move anymore on that tax until the end of the legislature, using, alternatively, the Extraordinary Investment Tax Credit.
Or, on the contrary, the PS would agree to make the State Budget viable for 2025 if the Government renounces reducing the IRC for next year, using instead alternative the Extraordinary Investment Tax Credit. In the remaining years of the legislature, if the Government wanted to lower the IRC, it would be at its own risk and will not have the support of the PS.
The Social Democrats quickly realized that Pedro Nuno Santos was using the fact that the Extraordinary Tax Credit mechanism was created during the Pedro Passos Coelho government as throwing weapon — in fact, the ‘father’ of the measure was Paulo Núncio, then Secretary of State for Fiscal Affairs and now parliamentary leader of the CDS. Therefore, the current Government would not have, in theory, great arguments to reject a proposal that was born with the PàF.
But, as has been repeated in recent days, this comparison had two problems: firstly, in the same period in which this Extraordinary Tax Credit was born, the PS of Antonio José Seguro agreed to sign an agreement with Passos’ PSD to carry out a transversal reduction of the IRC, an agreement that would be broken by António Costa; Furthermore, this tax credit was a mechanism found to inject money into a recovering economy; This Saturday, on RTP3, António Leitão Amaro called him “adrenaline injection“.
Now, the Government understands, with the economy growing between 2% and 2.5% and with the PRR gaining ground, investment is accelerating and the tax credit would not be great impact immediately. If it accepts this proposal from Pedro Nuño, the Government would renounce reducing three percentage points in the CRI, after having gone from a more ambitious reduction (from 21 to 15%).
This Sunday, Hugo Soares he spoke to the journalists from Mondim de Basto, and despite once again accusing Pedro Nuno Santos of inflexibility, he made no further comments. Launching comments to the Executive led by Luís Montenegro, which meets tomorrow Monday in the Council of Ministers, Hugo Soares said that it is up to the “Government to make a decision” on Pedro Nuno’s proposal, and she will be the “prime minister to speak and explain to the country” the meaning of the decision.
This Monday, and contrary to usual, there will not be the usual briefing after the Council of Ministers, in which it is indicated that the Government will not want to give any signal regarding Pedro Nuno Santos’ counterproposal. Furthermore, Luís Montenegro’s interview with journalist Maria João Avillez is eagerly awaited, which will take place on Tuesday at the SIC. This is Montenegro’s first major interview since he was elected prime minister and could serve to announce a decision.
“It seems strange, but Pedro Nuño prefers elections to lowering the IRC by 1 percentage point”
Source: Observadora
