Dublin, Sept. 20, 2026 (Lusa) - Finance minister Joaquim Miranda Sarmento warned that reducing VAT on fuel and applying zero VAT to the food basket, as called for by Chega and the PS, would push Portugal into deficit in 2027.
«To pass such a proposal, [Chega and the PS] would both have to vote in favour; [therefore], if they wish to form a coalition and pass this, what they are telling the country is that they want there to be a deficit in 2027,» said Miranda Sarmento in an interview with the Lusa news agency, on the sidelines of the informal meeting of Economic and Financial Affairs Ministers (Ecofin) in Dublin.
With less than a month to go before the government submits its proposal for the 2027 State Budget to parliament, the minister added that Chega and the PS would have to, in addition to presenting «a measure that has a budgetary impact», put forward another «offset that balances the books» on the revenue side, otherwise the country would «quickly slide into a deficit».
Against a backdrop of rising prices linked to the war in the Middle East, both Chega and the PS are calling for a temporary reduction in Value Added Tax (VAT) on fuel from 23% to 13%, as well as zero VAT on a series of essential foodstuffs.
The minister estimated the annual impact of the two measures at around €2 billion: €1.2 billion from the VAT reduction on fuel and €800 million from the VAT reduction on the food basket.
According to the minister, «there is no budget balance of that amount», i.e. €2 billion.
«Well, on the contrary, it will be much, much lower. It will be positive; there will be a surplus in the public accounts, but it will be much lower,» he explained.
Miranda Sarmento acknowledged that there is little scope for further measures affecting the public accounts: «The budget for the 2027 financial year is demanding and, therefore, the budget balance is relatively small.» As for the negotiations, the government intends to engage in dialogue with all opposition parties to secure the passage of the 2027 State Budget proposal.
«We do not have a preferred partner, either on the budget or on any other legislation; we negotiate with everyone,» and so «we will speak to everyone, we will negotiate with everyone,» the minister assured.
The aim is «to have the budget approved because the country needs to have a budget; it can avoid slipping into another political crisis and has everything to gain from operating on a twelfth-based basis,» he maintained.
According to the minister, the 2027 State Budget proposal will be «simple», similar to the 2025 and 2026 documents, and focused on budgetary rules.
The government will present measures requiring legislative amendments separately to parliament, allowing the parties to discuss and vote on them individually, he explained in this interview with Lusa.
The government is due to submit the 2027 State Budget proposal to parliament by 10 October, following which parliament will debate and vote on the document.
The government led by Luís Montenegro seeks to negotiate with opposition parties to ensure the budget passes, as it does not have an absolute majority.
ANE/ADB // ADB.
Lusa
