Portugal Approves 800 Million Euro Cost-of-Living Relief Package

The Government of Portugal approved an 800 million euro relief package designed to mitigate living-cost pressures through a combination of one-off pension supplements and personal income tax cuts. The pension component, totaling 400 million euros, will provide payments between 100 and 200 euros in December to more than two million pensioners earning up to 1,600 euros monthly.

Complementing the bonuses, the government will implement personal income tax cuts for individuals with annual taxable income up to 43,090 euros, applied retroactively to January. These measures currently await parliamentary approval, though they are expected to receive cross-party support.

Prime Minister Luis Montenegro rejected opposition calls to eliminate VAT on essential food items, arguing that such a move would jeopardize public finances. Montenegro noted that Portugal is on track for a budget surplus in 2026, which would mark the fourth consecutive year of surpluses. He emphasized the need to balance social sensitivity with budgetary responsibility, stating he would not offer illusions that would result in a heavy price in the future.