Government gives 125 euros to those who earn up to 2700 euros and will lower VAT on electricity

Prime Minister presents measures of the "Families First" plan

Prime Minister António Costa – Photo: Alexandros Michailidis/Shutterstock

Each citizen who earns up to 2700 euros a month will receive an “extraordinary payment” of 125 euros to face inflation, pensioners will receive “an extraordinary supplement equivalent to half a month of pension”, the Government will propose to Parliament the reduction of VAT from electricity to 6% and the support in force for fuels will be maintained. These are, in summary, the measures of the support package for families approved by the Government.

At the end of a long Council of Ministers and after having communicated the contents of the package to the President of the Republic, Prime Minister António Costa announced that, in order to stop the loss of purchasing power of the Portuguese, an "extraordinary payment in the amount of 125 euros to each non-pensioner citizen with monthly income of up to 2700 euros».

"Regardless of the family's income", the Government also decided to make an "extraordinary payment of 50 euros for each descendant, child or young person, [up to the age of 24], who are in charge" to be paid in October, added the prime minister, at a press conference at Palácio da Ajuda, in Lisbon.

For their part, pensioners will receive “an extraordinary supplement equivalent to half a month's pension”, which will be paid “in one go, in October”.

With regard to pensioners, António Costa said that the Government will propose to the Assembly of the Republic that, next year, pensions of up to 886 euros increase by 4,43%. Pensions with amounts between 886 and 2659 euros per month will grow by 4,07% and the rest will rise by 3,53%. In this way, assured the Head of Government, pensioners “will see the purchasing power lost throughout this year fully restored”.

The Government will also propose to the deputies to lower the VAT rate on electricity, which is currently 13%, to the reduced rate of 6%. Costa stressed that it is the Government's wish that this issue be discussed in the AR "with an urgent nature, so that it can enter into force by October 1".

As for fuels, the Government decided to extend, until the end of the year, the suspension of the increase in the carbon tax, the return of additional VAT revenue and the reduction of the Tax on Petroleum Products (ISP). "In other words: at this week's prices, for each 50-litre tank, consumers will pay 16 euros less for gasoline or 14 euros less for diesel than they would pay if all these measures were not renewed", underlined the prime minister.

Other measures announced have to do with house rents. The Government limited the maximum update of the value of housing and commercial rents to 2% in 2023, at the same time as it announced the creation of extraordinary support for rentals, through the attribution of a tax benefit on property income.

On the other hand, the Government also determined the freezing of prices for public transport passes and tickets at CP throughout 2023, ensuring due compensation to this company and the transport authorities.

The meeting of the Council of Ministers this Monday also approved the decree-law that, exceptionally, allows the return of end customers of natural gas with annual consumption of less than or equal to 10.000 m3 to the regulated tariff regime.

This Government plan, which is called “Families First” and is presented as a “Response Plan to the Increase in Prices, focuses on eight areas: income, children/young people, pensioners, electricity, gas, fuel, rents and transport. In total, the Executive will spend 2400 million euros on this plan.

As for companies, specific support measures will only be taken after the extraordinary meeting of European ministers responsible for energy, which will take place next Friday.


Here is a summary of the announced measures: