Government should cut tax benefits, says Brussels
The government should cut tax benefits, says Brussels, to ensure the efficient implementation of the Recovery and Resilience Plan (PRR). This recommendation accompanies the approval of the reprogramming of the RRP, which now includes a significant increase in total funding, from 16.6 to 22.2 billion euros. In this way, the European Commission thus aims to respond to inflation and include new investments, ensuring that Portugal fulfils all its targets by 2026.
Increase in Funds and New Measures
With the reprogramming approved, Portugal's RRP will receive an extra 5.6 billion euros, distributed between grants and loans. Naturally, this increase in funding will allow the Portuguese government to adapt to the rising costs of the measures already defined and to implement new investments. Areas such as health, education, science and housing will see a significant boost, reflecting the plan's growing ambition.
Tax Reforms Needed
However, implementing these measures and obtaining the additional funds will not come without challenges. Brussels emphasises that the government must cut tax breaks to ensure the sustainability of the RRP. Thus, this measure aims to balance public finances and ensure that the country remains on track to achieve the goals stipulated in the recovery plan. Cutting tax breaks is seen as a crucial step for the efficiency of the RRP.
Impacts on the Economy and Society
The proposed tax reforms will have a direct impact on the Portuguese economy and society. The financial reinforcement will allow for the modernisation of health infrastructures, with the purchase of new equipment for hospitals and the creation of more health units. In education in particular, there will be substantial investment in refurbishing schools and creating new places in crèches and student accommodation. These investments are aimed at strengthening the welfare state and improving people's quality of life.
Focus on Territorial Cohesion
In addition to investments in specific areas, the reprogramming of the PRR also places a strong focus on territorial cohesion. Measures are being distributed throughout the national territory, promoting more balanced and inclusive development. For example, projects such as the creation of new Citizen's Spaces and interventions in cultural heritage in the different regions demonstrate the commitment to territorial valorisation.
Future prospects
With the approval of the reprogramming of the RRP and the increase in funding, Portugal has a unique opportunity to modernise its economy and strengthen its society. However, the success of the plan will depend on the effective implementation of the proposed tax reforms. The government must cut tax breaks, says Brussels, to guarantee the sustainability and efficiency of the RRP. These actions, coupled with a continued focus on territorial cohesion and infrastructure modernisation, will position Portugal to face future challenges with resilience and determination.
To summarise, the increase in RRP funds and the need to cut tax benefits highlight the importance of a balance between investment and financial sustainability. The Portuguese government, with the support of Brussels, must continue to work towards achieving the targets set, promoting economic and social development throughout the country.
At Serro & AndradeWe offer expert advice to help companies navigate these tax changes and maximise their opportunities within the new economic landscape. Contact us to find out more.
