Portugal plans to introduce tax on real estate fortunes

Portuguese Prime Minister Antonio Costa gestures during a debate at Parliament in Lisbon. (AFP)
Updated 15 October 2016
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Portugal plans to introduce tax on real estate fortunes

LISBON: Portugal will introduce a tax on real estate fortunes above 600,000 euros ($661,000) in 2017 to help pay for pensions, the government has said.
The tax, fiercely opposed by the real estate sector which fears it will put the breaks on foreign investment, was included in Socialist Prime Minister Antonio Costa’s draft budget for 2017.
“The taxation of large real estate fortunes will enhance the sustainability of our social security system and contribute to fiscal justice,” he told parliament.
If the value of all real estate owned by a taxpayer surpasses 600,000 euros ($661,000), a levy of 0.3 percent will be applied to the amount above this threshold, according to the draft budget.
The government expects the measure will raise 160 million euros ($176 million) each year.
“The taxation of real estate fortunes will make it possible to raise pensions,” said Catarina Martins, a lawmaker with the far-left Left Block party which backs the minority Socialist government.
The threshold of 600,000 euros will spare most beneficiaries of the country’s so-called “golden visa” scheme, which has helped fuel demand for real estate among wealthy foreigners from outside the European Union.
Cash-strapped Portugal in October 2012 started offering “golden” visas to non-EU citizens willing to invest 500,000 euros in property, make a capital transfer of one million euros or create 10 jobs.
The Portuguese visas allow foreigners to travel within Europe’s 26-country Schengen free trade zone without restriction.
Portugal has issued nearly 4,000 “golden” visas that have generated investments of 2.37 billion euros since the scheme was launched at the end of 2012, most of them to Chinese, Brazilians and Russians.
The Association of Lisbon Homeowners (ALP) criticized the new tax, calling it an “unprecedented fiscal attack against the real estate sector.”
The measure will also affect foreign buyers who have flocked to Portugal to take advantage of tax exemptions granted to European retirees who move for the first time to the country.
French nationals account for 27 percent of all foreign real estate buyers, followed by Britons who account for 18 percent.
“With this measure, the government has shot itself in the foot. Portugal can’t constantly change the rules of the game,” added Henrique Moser, a lawyer with the Telles law firm which specializes in real estate.
The government also decided to raise its tax on home rentals for tourists, which have up until now been lower than those applied to long-term rentals.
The measure comes as home rental websites such as Airbnb have seen their business soar in Lisbon and other Portuguese cities.
The number of people who have stayed in accommodation in the Portuguese capital has doubled to 433,000 in 2015 from 213,000 the previous year.
Costa came to power in November 2015 after his party teamed up with the Communists and Left Block to oust a center-right administration.
The tiny leftist parties did not formally join the new government, but Costa relies on them for a majority in parliament to pass legislation.


Lebanon’s Hariri calls for cabinet solidarity in budget debate

Updated 34 min 1 sec ago
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Lebanon’s Hariri calls for cabinet solidarity in budget debate

  • The PM said cabinet ministers need to be united and responsible
  • Lebanon’s debt is almost 150% of its GDP

BEIRUT, June 18 : Lebanon Prime Minister Saad Al-Hariri on Tuesday called for parliament to quickly approve the country’s 2019 budget and urged his coalition government to avoid internal disputes.
The cabinet this month agreed a budget plan that shrinks the projected fiscal deficit by 4 percentage points from last year to 7.6% by cutting spending and raising taxes and other fees.
“What I want during the debate is for us to be responsible and united, and not contradictory,” Hariri said in a statement, addressing cabinet ministers as to their comportment during the parliament debate.
Parliament’s finance committee is debating the draft budget and has suggested amendments, local newspapers reported. It will then put the budget to the full assembly to ratify it.
Parliament is mostly composed of parties that are also present in the coalition government and which supported the budget there.
Since the budget was agreed there have been fierce arguments between parties in the coalition over several subjects, though these have not targeted the budget.
Lebanon has one of the world’s heaviest debt burdens, equivalent to about 150% of GDP, and the International Monetary Fund has urged it to cut spending.
“We have held 19 cabinet meetings to agree on this draft budget and these sessions were not for fun, but for deep, detailed debate over every clause and every idea,” Hariri said.
“For this reason, I consider it the responsibility of each of us in government to have ministerial solidarity...to defend in parliament the decision that we have taken together,” he added.
After the 2019 budget is agreed, the cabinet must quickly start working on the 2020 budget and on approving the first phase of a program of investments toward which foreign donors have offered $11 billion in project financing. (Reporting by Angus McDowall, editing by Ed Osmond)