The Prime Minister of Portugal, Montenegro, is implementing a fiscal policy that combines an IRS reduction with extraordinary payments to pensioners. This strategy represents the so-called "budget dividend" resulting from the improvement in the country's economic situation.
The Executive justifies these measures as a way of distributing the benefits of economic growth among both taxpayers and pensioners. The combination of both policies may seem sensible from a political and social standpoint.
However, the article warns of risks associated with this approach. The reduction in tax revenue combined with increased public expenditure can put pressure on Portuguese public accounts. There is also a risk that these measures may be unsustainable in the medium term if the economic situation deteriorates.
