The 2017 state budget was approved by the Council of Ministers on Thursday afternoon and will next be tabled for debate by MPs in Parliament.
The budget will centre around indirect taxes and a new property tax, while increasing pensions and doing away with a surcharge on personal income.
The draft proposal is widely expected to receive approval, with the Left Bloc and the Communist Party set to place their weight behind the Socialist minority government.
The government has also made revisions to its economic forecasts, predicting a slightly larger budget deficit and marginally smaller economic growth.
The income tax surcharge implemented by the previous coalition government will be eliminated for those earning less than 20,000 euros a year, but will remain in force for those whose annual pay cheques amount to more than 80,000 euros. Taxpayers in between will see the gradual removal of the surcharge.
A sugar tax is also contained in the 2017 budget, and will focus on fizzy drinks. However, Portuguese brands will escape this tax, which might pose some legal issues on a European level.
Pensions look set for a one-off €10 raise, except for top earners, especially as this increase is the cornerstone of demands set out by both the Communists and the Left Bloc.
Real estate and cars will also once again be the target of the cash-strapped government.
While fuel taxes and car taxes are expected to rise once again, property appears to be a focal point of raking in some additional revenue.
Earlier this year the government revealed details of a new property tax which will rise in accordance with the amount of exposure to the sun and views of a property. The decree is said to be aimed at making the country more “socially just”.
According to the legislation, a good view and a south-facing house could see homeowners face substantial increases in their council tax bills. Homes with decent views and which maximise solar exposure could be subject to an increase in council tax rates of up to 20 percent.
On the other hand, houses facing cemeteries, which are north-facing or on the bottom floors of an apartment block could see a drop in council tax of up to 10 percent.
Noise pollution will also play a role, but essentially the less light a house receives in the day, the less tax its occupants will have to pay.
State Secretary for Finance Rocha Andrade said at the time that the revision is not to gain additional revenue, but rather to tax people according to the homes and luxuries they enjoy.
There is also news that local lodging taxes could be increased. Currently, taxpayers letting out properties to tourists face a tax of five percent, as opposed to the 28 percent paid by landlords on rental income obtained from permanent tenants. Reports this month suggest the government is looking to introduce a flat rate of 28 percent, irrespective of whether the property is rented out long-term or to holiday makers.
The opposition Social Democrats (PSD) and Christian Democrats (CDS) have attacked the latest proposal, saying that the budget is one where taxes will be increased, and not reduced, as the government has suggested.
The two parties have also accused the government of scaring off investors with constantly-changing fiscal policies.
The more than 200 pages contained in the 2017 budget proposal is expected to undergo a series of alterations in the coming weeks as uncertainty is set to linger among taxpayers as to how much less, or more, taxes they will be paying next year.