Another income tax cut and another pensioner bonus, if Portugal's books allow
At the PSD's summer rally in the Algarve, the prime minister tied both measures to budget headroom. He also announced the rail pass extension and claimed 28,300 homes delivered under the recovery plan.
Luís Montenegro opened his party’s political season at the Festa do Pontal in Quarteira with a 48-minute speech and two promises carrying neither a figure nor a date. If there is budget headroom, he said, the government will continue “the policy of cutting income tax and raising the lowest pensions”. The conditional is the load-bearing part of that sentence.
“We have already cut income tax four times,” the prime minister said, putting roughly €2bn back in workers’ pockets by his own count. Any further cut, though, depends on the public accounts: “The moment we have the guarantee that public finances can take it, we will continue this policy.”
Why the conditional matters
Over the past two years the government has paid supplements of €100 to €200 to pensioners on incomes up to €1,567.50, close to €800m in total, on top of more than €1bn in regular pension increases. A third supplement is what is now on the table, with no value and no timetable attached.
The budget picture explains the caution. For this year the government has already revised its balance projection down, from a slim surplus of 0.1% of GDP to 0.0% in the medium-term plan sent to Brussels. That is not where the room for permanent measures comes from.
Montenegro laid part of the squeeze at the opposition’s door, arguing that this year’s budget carries “a billion euros decided by the opposition, which compressed our room to decide” — the same “negative coalition” line about the Socialists and Chega he used in the State of the Nation debate.
What came with a date attached
Two things landed more firmly. The €20 green rail pass will be extended to urban trains in Lisbon and Porto “probably as soon as September” — we set out what changes for commuters on the suburban lines. And the state has agreed to buy 13.7% of grid operator REN, an operation Montenegro placed inside the sovereign fund he is preparing and described as an investment rather than renationalisation.
On housing he claimed 28,300 homes delivered under the EU recovery plan as of 14 August, above the 26,000 target. That number covers new build, refurbishment, acquisition and lease-to-sublet, not only homes built from scratch. The recovery plan’s own monitoring reports separate “delivered”, “completed” and “under construction”, and those totals are not interchangeable.
For the Algarve he confirmed the public tender for the new hospital, the Alportel and Foupana dams, and Formula 1 races in 2027, 2028 and 2029. Two ministers under pressure, Fernando Alexandre and Luís Neves, were absent, and the speech went nowhere near either controversy. The party’s summer school in Castelo de Vide had set the tone for this return. Official government statements are published on the XXV Constitutional Government’s portal.
Image: © European Union, 2025 (CC BY 4.0)
