Portugal’s Center-Right Government Proposes Tax Cuts to Attract Young People to Stay

Portugal rolled out a plan to reduce youth emigration through tax cuts and access to affordable housing (Flickr)

Portugal’s center-right government released its budget for the next fiscal on Thursday, October 10, per Euronews. The plan included tax cuts for people under age 35 to reduce emigration and encourage immigration. 

According to Reuters, the budget proposed that people under 35 would pay no taxes if they earn €28,000 or less for the first year of work. After the first year, taxes will gradually rise to a 75 percent exemption, which would increase to 50 percent and then 25 percent, until finally, at the end of ten years, a 0 percent exemption. These tax cuts, which will cost an estimated 0.2 percent of Portugal’s GDP or €650 million, would also apply to foreigners as the government works to attract talent. 

BBC reports that this new budget comes into the parliament amid labor shortages; 30 percent of people (around 850,000) between the ages of 15 and 39 have emigrated from Portugal due to low wages and poor working conditions. The right-wing government believes that, with these new measures, they will be able to stop the flow of emigration and invite immigration to combat the brain drain that has hindered development.

According to Euronews, the government also hopes to incentivize people to stay in Portugal by providing a state guarantee on 100 percent of first-time home buyers’ mortgages. This law follows youth-led public demonstrations for affordable housing, as younger generations have increasingly perceived that the government favors foreigners over its citizens. Housing is a major issue in the country because of Portuguese laws that grant residency to foreigners in the country in exchange for the purchase of property in Portugal. As a result, many native citizens struggle to purchase homes as they compete with well-resourced people from across the globe.