Difference between Government and PS on taxes is surmountable. – Marques Mendes

BIDEN E TRUMP

1. Biden’s withdrawal is not surprising. After everything that has happened in recent days, there was no way out: the majority of the party was against him; the main figures, including Obama; the press that is biased towards the Democrats; and the campaign’s financiers. It may be the best possible solution. But that does not mean that it can be a “miracle” solution to lead the Democrats to victory. It is a necessary condition, without a doubt. It remains to be seen whether it is a sufficient condition.

• Firstly, because there is little time until the election. Secondly, because it is not known whether in such a short time there will be a chance of launching a winning candidate. Kamala Harris, the vice-president, also has her antibodies. Several other well-known figures also lack time to establish themselves. Only Michelle Obama will be undisputed, but it does not seem like she can advance.
• The only major advantage that the Democrats have with this decision is the advantage of surprise. Suddenly, the attention that was all focused on Trump will now be focused on the Democratic candidacy. And the surprise effect, in politics, is usually very powerful. The anti-Biden rhetoric that the Republicans have been rehearsing becomes outdated. Everything is now open to question.

2. On the Republican side, there is motivation and opportunism.

• Motivation, because everything is going well for them: Biden’s fragility, the divisions within the Democrats and the failed attack on Trump.
• Opportunism, because Trump now seems to have transformed, at the last minute, into the Head of the National Union, the chief reconciler of the USA. It is the greatest exercise of opportunism in living memory.
• All of this is an electoral tactic. It may even work. But none of it is genuine. Trump is the same as he always was: the one who encouraged the attack on the Capitol; the one who divided America in half; the one who attacked scientists during the pandemic; the one who even confronted his vice-president Mike Pence.
• One thing is certain: Trump’s victory will be a disaster for Ukraine and the EU. Ukraine will be more at Russia’s mercy. Europe will be caught between the Russian threat and American abandonment.

INCREASE IN CRIME IN LISBON AND PORTO

1. There is a serious problem in the metropolitan areas of Lisbon and Porto: the increase in crime and the feeling of insecurity. This is a problem that is not yet on the political and governmental agenda, but it is a serious concern for people and local authorities. An intervention plan to combat this problem is urgently needed.

2. The issue was already identified in the 2023 Homeland Security Annual Report, but little attention was given to it:

• Violent crimes increased in 2022 and 2023. Last year, group crime increased by around 15%. Juvenile delinquency increased by almost 9%. Drug seizures increased by 13.6%.
• The most serious problem, however, is in Greater Lisbon and Greater Porto. More than half of the country’s violent crimes occur there, including: group crime; crime associated with drug trafficking and consumption; and violent crime in nightlife areas.
• With two aggravating circumstances: first, the reality is probably much worse than the numbers portray, because many people no longer even report to the authorities; second, there is a serious shortage of police officers on the streets.

3. The MAI needs an intervention plan that guarantees, at least:

• More policing on the streets, the only way to deter crime and restore the feeling of security.
• Greater use of video surveillance. An essential tool.
• Greater attention to specific situations: beaches and nightlife areas.
• Greater cooperation with local authorities in resolving a problem that is not one of xenophobia. It is a problem of crime and all crime must be combated.

BUDGET NEGOTIATIONS

1. The State of the Nation debate had no history. It was a reheated debate. What was interesting was understanding the state of the Budget negotiations. There was a lot of political “theater”. And from this “theater” there are three conclusions to be drawn:

• The first is that politics has changed a lot in a short space of time. A few months ago, the big question was whether the State Budget would be approved or rejected. Now, there is no doubt: the State Budget will be approved. The only thing left to do is to know who will make it happen: the PS or Chega. Everything has changed because polls show that the Portuguese want stability and reject crises. Therefore, no party wants to be seen by the people as a factor of instability.
• The second is that the PS has undergone the most radical change. A few months ago, its leader said that it was almost impossible to make the budget viable. This week, he actually received a mandate to negotiate. This shows that Pedro Nuno Santos is a pragmatic politician: he does not want to displease his mayors; he does not want to run the risk of early elections; and he understands that at this moment, it is more popular to make the budget viable than to reject it.
• The third is that popularity helps a lot. If the government were in bad shape, implementing the State Budget would be a tragedy. Since the government is well regarded and the prime minister is the most popular politician in the country, no one wants to “push the envelope” and be the bad guy.

2. In the context of these negotiations, there is one party that does not count towards the viability of the State Budget, but which the Government must pay attention to: the IL. The fact is that, sooner or later, if Luís Montenegro and the AD want to have an absolute majority, they will need the IL. Not to replace the CDS, but to add to it. And these strategies are prepared in advance.

HOW TO MAKE AGREEMENT ON TAXES?

1. Given the political dimension of the negotiations, it is necessary to anticipate their content. Everyone says that there is an irreparable divergence between the Socialist Party and the Government in the area of ​​taxes. I don’t think so. There is a divergence, yes, but it is a divergence that can be overcome.

2. Let’s look at the case of IRC. The Government cannot do without reducing IRC. It is a structural measure. But it is possible to reach an agreement with the PS. By modelling the reduction of IRC.

• There cannot be a corporate income tax (IRC) for each sector of activity. The EC does not authorize this. However, there can be a reduction in the IRC depending on the type of investment. For example, favoring companies that invest the most in innovation, digitalization or sustainability.
• In this way, the Government is already moving closer to the PS. And this rapprochement has another advantage: it can guarantee the stability of this tax reform, which is good for attracting new investors.

3. The same can be said about the IRS Jovem (Youth Income Tax). The measure must exist: we need to reduce the emigration of talented young people. But the measure can be calibrated: calibrated in terms of amounts, calibrated in terms of progressiveness, calibrated even in the way it is applied, so that, when it comes to an end, a sudden change can be avoided. A convergence of positions can also have the advantage of avoiding an appeal to the TC. The constitutionality of the measure is not clear.

4. Also important will be the decision to reinstate the tax regime for non-habitual residents (NHR): a more favourable IRS (20%) to attract qualified foreigners or even Portuguese citizens currently living abroad. Not pensioners, but highly qualified professionals. This is not a matter for the State Budget. But it is a decision that the Government should take soon.

TGV LEAVES ME

1. There has been talk of building the TGV for years. In Socrates’ time, the project was about to go ahead. But everything went back on track. This time, it seems to be serious. This week was the turning point: firstly, a tender confirmed that there is an interested party to build the 1st section of the TGV (the most difficult); secondly, the government decided to open a tender for the 2nd section; thirdly, the EC has already approved the first financing for Portugal for the TGV and a new request for financing will be made in September.

2. This investment is absolutely strategic for Portugal. Let’s see:

• The first section, which includes a new bridge over the Douro, will be built in 2030. The second section will be completed in 2031, allowing 19 trains per day to run in each direction at high speed. The entire project will be completed in 2032.
• With the TGV fully operational, from 2032 onwards, there will be 60 trains per day between Lisbon and Porto, in both directions, at high speed. The Porto-Lisbon TGV journey will take 1 hour and 19 minutes (currently the Alfa Pendular journey takes around 3 hours). The cost of a ticket for the same Lisbon-Porto journey will be €25 or €26 (much cheaper than the current cost on the Alfa).
• In addition to all this, the current Alfa Pendular will be able to circulate in better conditions, as it will also be able to use the new, more efficient lines.
• In short: there will be a huge improvement in service for people. And another huge improvement in the circulation of goods. Society will gain in quality. The economy will gain in competitiveness.

EUROPEAN POSITIONS

1. This time, the EU fared much better than the US. It decided on European positions quickly, coherently and unequivocally. Many thought that there was too much optimism surrounding the predicted election of António Costa to the European Council and Ursula von der Leyen to the European Commission. As it turns out, there was realism.

• European leaders and MEPs have realised that this is not the time for adventure: the times ahead, if Trump’s victory is confirmed, are bad times for the EU. Europe will have to open its purse strings wider in terms of military investment. It will be increasingly left to its own devices.

2. Ursula von der Leyen has made two new promises: a Commissioner for Housing and another for Migration. This makes sense. But Europe’s central problem is economic. Every year, Europe is losing out compared to the US: it is losing out in economic growth, it is losing out in competitiveness, it is losing out in attracting investment and it is losing out in retaining its talent.

• A concrete example: in the last five years alone, from 2019 to 2023, European GDP grew 5 percentage points less than US GDP. And in previous years the trend was the same. This is the EU’s essential challenge: to reverse the decline in which it is immersed.