Reducing VAT on restaurants from 23% to 13%, a measure that would cost one billion euros, would be a “bad economic policy decision”, said the Minister of Finance, Joaquim Miranda Sarmento, this Friday, October 24, at a hearing at the Budget, Finance and Public Administration Committee of the Assembly of the Republic, to assess the proposed State Budget for 2026 (OE2026).
Miranda Sarmento was speaking about Chega’s proposal to reduce VAT on restaurants, which, argued deputy Pedro Pinto, “generates more jobs” and means “employees are better paid”.
“Do you think that taxpayers in general should give a tax benefit to a specific sector worth one billion?”, said the Minister of Finance. “To give you an idea, one billion euros was the cost of the government’s initial proposal for IRS Jovem, it meant giving all young people a reduction in IRS to one third of what they paid before,” he said.
“One billion could mean reducing three percentage points in the IRC rate”, which would apply to “all companies in all sectors”, he exemplified. “One billion euros would allow a reduction of one percentage point in the normal VAT rate or two percentage points in the reduced rate”, he continued, which would allow the Government to “make a reduction in all or almost all goods and services”.
Also in response to Chega’s deputy regarding the reinstatement of the full collection of the Tax on Petroleum Products (ISP), he acknowledged that “there is an obligation, from the European Commission’s point of view, to reverse the temporary discount that was created in 2022” at the start of the war in Ukraine. After the inflationary outbreak, the Commission has been putting pressure on countries that maintain discount mechanisms on the price of fossil fuels, having done so again in the summer of this year.
Miranda Sarmento said that the Government will “within what is possible, and by accommodating the production of fuel prices, reverse this discount”. In other words, the objective is to “protect the price of fuel at the gas pump”.
The reversal of the ISP discount, the minister insisted, “will always be as gradual as possible, so as not to have an impact on the final price of gasoline and diesel”.
Also in response to criticism from Chega deputy Eduardo Teixeira about the increase in tax revenue foreseen in OE2026 (“the Portuguese will abruptly pay more taxes, despite there being no rate increases there is a brutal increase in collection”, he said), Miranda Sarmento recalled that “there is no increase in tax rates, so the growth in tax revenue results from economic activity and the increase in nominal GDP”.