[devuo]

First, Joaquim Miranda Sarmento is not the Portuguese Prime Minister, but the Minister of Finance.

Second, the tax breaks were removed at the end of last year because of a widespread feeling in the general populace that these were deeply unfair policies that were understood at the root cause of gentrification and unreasonable real estate valuations. The median house price in Lisbon and Porto metro areas, are now above what the p95 Portuguese salary can pay. So yes, speculation and wealthy foreigners are an issue, as it's not Portuguese salaries propping these values.

Third, the party in power does not have a majority in parliament. This means they'll need support from other parties to approve this deeply divise tax break. While I'm sure they'll get the support from the Liberal party, I'm seriously doubtful they'll get it from the other parties. It's also quite likely that we'll have new elections in the next 12 months and the party in power, despite many populistic policies in the last 4 months since they won by a few thousand votes the election, has not yet been able to gain a wider trust from the voters since then. I doubt this tax break will see the light of day anytime soon.

Fourth and finally, there has been zero talks about this in Portuguese media. I feel this is more of a politician talking out of his ass without double/triple checking with the prime minister.

[voisin]

> The median house price in Lisbon and Porto metro areas, are now above what the p95 Portuguese salary can pay. So yes, speculation and wealthy foreigners are an issue, as it's not Portuguese salaries propping these values.

The second sentence doesn’t necessarily flow from the first. The same is true in major cities in Canada, New Zealand, England, etc etc, and this has little to do with foreign visitors and much to do with interest rates and availability and quantum of credit.

[lazide]

Uh, all of the locales you mention have been targets of huge foreign investment and ‘rich person’ immigration in the last decade.

[voisin]

Canada first massively disincentivized foreign investment and the. limited it altogether because, like Portugal, foreigners were the scapegoats for wildly increasing housing prices. Turned out they had almost nothing to do with it and it was all poor government monetary and lending policy. Governments will do everything they can to deflect blame.

I don’t have direct experience but I have a good friend from New Zealand who says the situation there closely mimicked what he has seen in Canada. Easy to blame foreign money, hard to look in the mirror.

Also, as a side note: “rich person” immigration is absolutely unequivocally not the reason for house prices skyrocketing in places like Moncton, New Brunswick or Campbell River, BC. No one from Monaco or Hong Kong is clamouring to buy houses at 5x historical average valuations compared to income.

I suspect in 5 years it will become obvious that in Portugal the situation had to do with monetary policy and not foreigners as well. Time will tell.

[tharmas]

Mostly false. Theyve been trying to attract foreign ”investors" for quite some time. Expo 86, 2010 Winter Olympics. What the clowns didnt realise was all the ”investment” would just go into housing. Nothing else

[voisin]

Every country tries to attract foreign investment. It’s a major component of GDP. And the difference between Canada ca. 1986 and 2010 versus 2018-2024 is… monetary policy! (Though admittedly 2010 looks pretty similar to 2018, house prices were already starting their insane run up).

It’s monetary policy. Housing prices are the fault of governments of various levels (constrained supply at the municipal levels, easy credit at the national levels). It isn’t foreigners, at least not in Canada, NZ, England, etc. and I’d bet money it isn’t in Portugal either.

[lazide]

Sure, but that isn’t the assertion I was replying to!

My personal opinion is the wealthy gravitating to a spot are as much about it being a useful ‘nutrient gradient’ on the monetary policy front, after the primary places are exhausted (like the big US cities) or because those places were less accessible now.

But the original assertion I was replying to was that those places never had the rich foreign investor thing happen - when they absolutely did!

[EVa5I7bHFq9mnYK]

Wealthy foreigners bring money from the outside into Portugal, so they are net positive. And not only money, but also knowledge, culture and diversity. Local restaurants are happy, local landlords are very happy, who is not happy is local renters. Maybe the tax should be imposed on the landlords' windfall profits instead?

[kranke155]

I cant help but laugh at the simplification. Net positive for whom?

Landlord and restaurants are happy vs the rest of the population (99%). Its a monstruous policy, considering wealthy nomads pay way less tax than locals.

[moltar]

It’s absolutely not true. I spoke to a very well informed and educated tax lawyer on this topic.

The majority of taxes collected in Portugal come from VAT and not income taxes.

Something like 30% of working Portuguese people don’t pay any tax especially when you factor in all of the various deductions and incentives.

The rest pay some but not much in absolute terms.

A remote digital nomad will pay more in absolute terms even with the 20% cap.

So all in all it’s an absolute gain to a Portuguese economy.

[JetSpiegel]

> The majority of taxes collected in Portugal come from VAT and not income taxes.

That's a bold face lie, unless by majority you mean less that 50%.

https://info.portaldasfinancas.gov.pt/pt/dgci/divulgacao/est...

For 2020, IRS+IRC 13B+4B IVA 16B.

---

30% of working people don't pay income tax because they are on the first income bracket (minimum wage or less), but they still pay VAT, 23% in the highest rate. The deductions don't come into play if you don't pay tax at all.

The injustice is simple: "digital nomad" earning pays VAT and minimum income tax, but leeches off roads, socialized healthcare, our nice climate. A citizen earning the same wages for the same job pays VAT and income tax, subsidizing the tax leech. Meanwhile, the immigrants with low wages are treated like criminals, but they don't even get that special tax rate, because they don't pay income tax!

Why should a poor country like Portugal subsidize immigrants from rich countries, but punish those from poor countries? The Americans that want socialized medicine and maintained roads can spend the money on their own country, our pay their fair share like other people living here.

[moltar]

> That's a bold face lie, unless by majority you mean less that 50%.

Ok, fair, I mis-spoke. It was not intentional. What I meant is that taxes on goods and services take a largest absolute % of government revenue. Which is was 37.8% in 2020.

The point I am trying to make is that no matter who is living in the country, they'll be using goods and services, which are taxed, and then the revenue flows to the government coffers. Arguably, people with more money, will spend more money on goods and services, and thus pay more into the coffers in absolute terms.

Meanwhile personal taxes made up just 19.8% of the government revenues.

> The injustice is simple: "digital nomad" earning pays VAT and minimum income tax

1. It is not "minimum", but a flat 20% rate.

2. In absolute terms they pay more though, than the average Portuguese citizen. Public goods are paid for, by the governmetn, in absolute fiat amounts (EUR), not in the percentage of income paid to the government.

> but leeches off roads

How are they leeching off the roads? They paid their share of the tax, and even more (in absolute amounts) as income tax.

> socialized healthcare

The vast majority of expats and digital nomads that I know have private insurance, which is also taxed, and goes back into the coffers, and provides jobs.

And besides, again, they have paid already more in absolute terms, than an average citizen.

> our nice climate

How can you leech off of a nice climate? If a digital nomad (with NHR) enjoys the climate, does it become less joyful for you?

> A citizen earning the same wages for the same job pays VAT and income tax, subsidizing the tax leech.

A person NHR status pays VAT and income tax too. Just income tax is capped at 20%.

> Meanwhile, the immigrants with low wages are treated like criminals, but they don't even get that special tax rate, because they don't pay income tax!

I think this is not on topic.

Anyone who fits into the NHR classification can claim NHR. It's not limited to "expats" or "wealthy" or "immigrants" or "non-immigrants" some limited class of people. In fact, even a Portuguese citizen could have claimed it, if they have not been a tax payer for the past 5 years (e.g. living elsewhere and returning).

The classifications are wide and abundant. Anyone with a profession in demand could have gotten the status.

Immigrants or not, people with no education or experience cannot expect to get the same treatment. Why would that be fair? You can extrapolate the same arguemnt then and say that anyone should be getting the same salary, no matter your education or qualification. That's not how the market works. There's the basic law of supply and demand.

What NHR was doing is simply incentivizing (with a temporary tax break) professional people the government deemed the country needed at the time. I also think this list has been adjusted multiple times, as requirements changed. If you know a better ways of incentivizing people to move to Portugal, I'd love to hear them and perhaps propose this to Portuguese government.

> Why should a poor country like Portugal subsidize immigrants from rich countries

I don't think Portugal is a poor country by any stretch of imagination. It might be "poor" in relative terms to other countries in Europe, but it's not poor in absolute terms.

Should or not, is entirely up to the citizens of Portugal to decide. In the past the citizens have elected officials that represented them and have made that decision, because, perhaps there was a benefit at the time. Then the decision was reversed, because, perhaps it no longer benefits the country?

> The Americans that want socialized medicine and maintained roads can spend the money on their own country, our pay their fair share like other people living here.

And I think they do. Portuguese people, represented by the officials they have elected, have decided that 20% is a fair share for new or returning residents to pay, so incentivize them to move to the country.

Otherwise, these people had many other opportunities and would not want to move to Portugal.

I don't know historically why this has been decided, but my speculation was that perhaps aging population and younger population moving away from the country was a big factor. This kind of outflow is simply not sustainable for long term. Who's going to pay the taxes needed to sustain aging population?

[kranke155]

Why do you sound like a western neoliberal politician? There are trillions of ways to fight immigrant outflows. The one the government choose to do in Portugal is blatantly unfair towards its own population.

[JetSpiegel]

> Just income tax is capped at 20%.

But why is it capped? Are they refugees? Do they need help? Do they have families?

The income tax law is clear, we have progressive taxes. From each according to its ability. The party that proposed flat taxes ammended it's program to remove it when it would result on a tax increase on workers earning less than 1000€. It's immoral and violates the constitution.

> It's not limited to "expats" or "wealthy" or "immigrants" or "non-immigrants" some limited class of people.

> And besides, again, they have paid already more in absolute terms, than an average citizen.

It's both an incentive and they pay more, a magical elastic number, both high and low.

Can a Uber driver claim that? Or a guy delivering food for Uber Eats? Or a dude working on a grocery store? Because those immigrants are already here, contributing to the economy even when treated like criminals, some have their families even. They don't get any tax breaks because they barely pay income tax, their wages are not high enough (bit still better than their native countries).

This is embedded on the proposal, it's for relatively rich people only, because it affects income tax.

I don't see any justification other than tautology "it's legal because the government decreed it". I'm not contesting the legality, just show the receipts. This was implemented before, and it only increased the housing prices.

> Anyone with a profession in demand could have gotten the status.

And work for a foreign company, interacting professionally with zero natives? How does this improve the local economy? Unless their jobs are barista, barman, chef.

I could even accept getting tax breaks for opening a company employing humans, even though it is unfair to existing companies. But it's not even that, it's tax breaks for living in a resort.

> I don't know historically why this has been decided

I do: a minority government flush with cash from the previous government (another faction of neoliberals) will be voted out at the end of the year, so they are pissing away that money to remain in power. There's no time to evaluate the proposals, they just repeat what was done before and reverted for good reasons.

There's no population outflow, we have positive net migration. The outflow was during the austerity years, that's why there are less doctors, nurses.

The aging population cannot afford medicine, they are not leaving either. These kind of policies drive the young people away, why subsidise some rich expat to live in my own country? It's better to move to a high CoL area, pay more taxes, but earn much more money anyway. Why don't these countries implement NHR schemes too, don't they want those coveted high earners.

> Who's going to pay the taxes needed to sustain aging population?

Not the expats, if they have tax breaks. They will cost money!

[kranke155]

Literally you can always pull off some argument to justify anything I guess.

The Portuguese people is against this nonsense for very, very good reasons that can't be explained away.

[ithkuil]

I feel you may be swinging the pendulum too far in dismissing the second order effects of money being spent.

Do the landowners and restaurant owners not pay taxes in Portugal? Do they spend all they new income abroad?

[ryandrake]

It's somewhere in the middle, probably. People talk about wealthy foreigners, tourists and so on "bringing money to an area" as if that money is being uniformly dumped from a helicopter onto everyone. That's never what happens. It goes into the pockets of a relatively small handful of people/businesses, those people will spend a fraction of it, and downstream people will spend another fraction, and so on. It trickles a little, but the entire community is not benefiting uniformly.

[EVa5I7bHFq9mnYK]

That's what I suggested in my heavily downvoted comment - "Maybe the tax should be imposed on the landlords' windfall profits instead?"

[kranke155]

The biggest second order effect is Portuguese people can't afford to live in major cities anymore.

Taking that into consideration the remainder is a bit academic.

[ithkuil]

gentrification is a problem. But it's hard to truly understand a problem if all sides try to make it extreme.

What does "Portuguese people can't afford to live in major cities anymore." actually mean? Does it mean that major Portuguese cities are no longer inhabited by a majority of Portuguese citizens? Or does it mean that there are some Portuguese people who no longer cannot afford to live there and that the blame for that is the few foreigners who contributed to raising prices in such a way that the those portugues who were already poor now crossed the line and couldn't affort to live in major cities, and joined the other portuguese who already couldn't afford to live there because of other causes of wealth inequality?

EDIT: It's not just mere nitpicking; I really think actual magnitudes are important in in discussions around these topics but the public debates I see often present the problem in very broad strokes and thus inevitably end up in shouting contests by people who have very strong opinions and the rest of us just looks the other way no longer believing what is being said. I know for a fact that that gentrification is destroying europeans city centres. It's very hard to afford to live in other places like Florence, Italy too. But is it really so clear cut that it's because of tax cuts for expats? Or it's just a result of a bimodal distribution of wealth including native wealth?

[EasyMark]

There is rarely one solution or “cause” when considering something as complicated as the economy. It’s really easy for politicians to play on the fears of the masses. There seems to be a solid 20-40% of ANY country that is willing to place all blame on “the other” rather than realize it’s a complex situation. So foreigners are an easy thing to pin all issues on for a politician to gain power, and it takes a complete failure of their flawed theory to convince the population that “hmmm maybe there isn’t an easy fix” by blaming foreigners. I see this nonsense all the time in Texas.

[EVa5I7bHFq9mnYK]

Sure about 99%? Tourism is 20% of Portuguese GDP. There are 66,000 real estate companies in Portugal. So many more than 1% benefit from wealthy foreigners.

The reason there are many poor people has nothing to with techbros with laptops. Better fix your bloated and corrupt public sector.

[JetSpiegel]

The "corrupt public sector" has been focus of complaints at least since the 19th century, across three regimes, but the number of children living on their parents' homes increased after the foreigners with laptops bought the damn houses, either directly, or through real estate funds.

[kranke155]

Most people I know who work in real estate companies don't get rich.

[leononame]

They might or might not be a net positive. I think it's more complicate. It's not just money, but also where the money is going and what it is achieving.

E.g. a lot of wealthy foreigners will increase the rent, prices for restaurants and services. Oftentimes, the quality of restaurants/services might go down (because if you cater to a crowd that only stays a couple of months, there's not the same need to get these people to come back. That are changes that are often received negatively by the locals.

Foreigners also make use of public services like streets, public transport etc., often without paying income tax.