Former national coach and Sporting coach, Paulo Bento, often said that he liked to work calmly. He repeated the phrase so much that Gato Fedorento picked up his verbal crutch and used it to create a hilarious sketch (The truth is that, in football as in life in general, tranquility is a virtuous state of mind. Even more so when it comes to a tendentious frenetic activity, such as politics.
This serves to underline that it is comforting to see so much calm in the discussion of the next State Budget (OE26). Without prejudice to healthy political scrutiny and debate, I consider it a sign of democratic maturity not to dramatize budget proposals just for performative reasons. The Budget tends to encourage rituals of contestation, often driven by issues that have nothing to do with the State’s accounts.
I know that the OE26 discussion takes place in very particular circumstances. The Opposition is not in a position to raise big waves, after the local elections have reinforced the political capital of the AD. Furthermore, with presidential elections in three months and it being impossible to dissolve Parliament, no one seems interested in causing a political crisis. Finally, the Government itself emptied the Budget of measures with some sensitivity, such as the new labor law.
Nevertheless, it is salutary to be able to discuss OE26 without the background noise of political chicanery. With this tranquility, citizens and companies benefit, as they see issues of their interest being debated in a more clear-sighted and less demagogic way. I hope that the next few days of budget debate confirm the political calm, as a serene environment is suitable for deep reflection on the government’s proposal. The fact is that, despite not having raised spirits, the OE26 is susceptible to criticism for what it proposes and, above all, for what it does not propose.
In fiscal matters, the Government’s continued effort to reduce labor taxes is to be welcomed. Although we see an erosion of net salaries. In effect, updating income brackets in the IRS table by 3.51% in 2026 is below what is necessary to ensure tax neutrality. Until June, in year-on-year terms, salaries were growing above 7.0%. For companies, the Government approved, outside the Budget, a gradual reduction in the nominal IRC rate: reduction to 19%, 18% and 17% in 2026, 2027 and 2028, respectively.
There continues to be a lack, inside or outside the Budget, of measures that promote the fiscal competitiveness of our economy. In particular, the reduction or even
elimination of the state surcharge tax, which heavily penalizes large companies. In other words, this category of companies that already pay a large part of the IRC and which, in addition, are the ones that create the most value, employment and innovation. A decrease in autonomous IRC taxation rates would also be pertinent, in order to smooth out companies’ contextual costs.
For what remains of 2025 and 2026, companies expect new incentives for innovation and competitiveness, the reinforcement of public financing instruments, the reform of labor legislation and, of course, the deepening of State reform. On this last point, it is important that the reorganization of Public Administration frees up resources for the economy, reduces bureaucracy, promotes the efficiency of public services and provides greater procedural transparency, economic rationality and investment capacity to the State. All of this would serve as a tonic for an economy that, due to the international situation and its own weaknesses, needs to give companies peace of mind.