Portugal: Applying European immigration pact will increase taxes – study

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Portugal: Applying European immigration pact will increase taxes – study

10:31 CAT | 10 Apr 2025

File photo: Lusa

The application of the European migration and asylum pact in Portugal, without more liberal measures on the entry of immigrants, will lead to a crisis in public accounts and an increase in taxes, according to a study released on Wednesday.

“Restricting immigration will lead to an increase in taxes, a decrease in public spending, a deterioration in public accounts and a subsequent impact on public debt, or a combination of all three,” say the authors of the Nova SBE study, which evaluates policies from an intergenerational perspective.

The study aimed to assess the impact of the European pact on Portugal and the authors conclude that “future generations will see their choices limited due to a more restricted public budget”, considering that “reducing immigration would deteriorate social security balances in the short term and have negative effects on pension provision in the medium and long term”.

“Assuming that the government transposes the Migration Pact into national law as it currently stands, then it would have to make a decision: reduce future pensions in real value or make greater transfers from the central budget to social security,” the study reads.

In the case of Portugal, “maintaining the current flow of immigration, it would be necessary to increase taxes by almost 15% and if the country were to adopt an extreme situation of not allowing any more immigrants, then it would have to increase taxes by 20%”.

“There are always choices we have to make (…) We can choose to raise taxes or lower spending or take on debt in order to have tighter migration,” explained one of the study’s authors, Marlon Francisco.

For the researchers, “imposing restrictions on immigration flows must take into account that such policies imply a significant increase in the tax burden for future generations,” because Portugal is on an “ageing demographic trend” and the arrival of new immigrants, who tend to be younger, needs to remain regular.

“Immigrants can have a positive impact on the sustainability of public finances,” but everything depends on their integration into the labour market, which can be achieved through a “low-cost policy, through an information leaflet or a mobile phone app” with information on rights.

As far as short-term impacts are concerned, the application of the European pact could reduce the pressure on wages for the less qualified, reduce house prices and crime, with an increase in “deportations of illegal immigrants”.

However, in the medium and long term, the analysis changes, because wages tend to adjust, the housing market normalises and, “when immigrants are well integrated into the labour market, immigration has no impact on crime”.

According to the study, the ratio of social security recipients to those in work will increase in the future, a trend that “will increase the pressure on the sustainability of public finances” in the EU.

“I think Portugal has had a good capacity to integrate emigrants,” not least because many come from Portuguese-speaking countries, said Marlon Francisco.

There is “even less social tension than there is in other countries” when it comes to this issue, but migration is starting to gain media attention, emphasised the economist, who highlighted the positive impact of this outflow of population.

“Emigrants are not a cost”, but “net contributors to the state”, he pointed out.

Source: Lusa