The Constitucional Decision On The 2013 State Budget

Author:Mr Rogério Fernandes Ferreira and Pedro Saraiva Nércio
Profession:RFF & Associados
 
FREE EXCERPT
  1. Introduction

    On the 2nd of January 2013, the President of the Republic of Portugal requested the assessment of the Constitutional Court regarding three articles of the 2013 State Budget Law (Law n. 66-B/2012, of 31 December).

    The President questioned, in particular, the article regarding the suspension of the holiday allowance, or equivalent, paid to civil servants, the article regarding the suspension of the holiday allowance paid to pensioners and the article regarding the imposition of an extraordinary contribution of solidarity to pensioners. Identical assessment requests were submitted by fifty parliament representatives of the Socialist Party, twenty four parliament representatives of the Communist Party, Left Block and Green Party and, except for the article regarding the holiday allowance, by the Portuguese Ombudsman.

    Besides the abovementioned articles, the twenty four parliament representatives of the Communist Party, Left Block and Green Party also requested the assessment of the following articles: the article regarding the salary reduction applicable to civil servants; the article regarding the suspension of the holiday allowance paid to employees subject to teaching and research agreements; the article regarding the payment reduction of overtime working hours to civil servants; the article regarding the taxation of unemployment and sickness allowances; the article regarding the changes made to the Personal Income Tax ("IRS") progressive tax brackets and the article regarding the 3.5 % IRS surcharge.

    On the 5th of April, the Constitutional Court issued Decision n. 187/2013, which declared the unconstitutionality of the articles of the 2013 State Budget Law regarding the suspension of the holiday allowance or equivalent paid to civil servants, to pensioners and to employees subject to teaching and research agreements, and regarding the taxation of unemployment and sickness allowances.

  2. The suspension of the holiday allowance

    As it occurred with the 2012 State Budget Law, the 2013 State Budget Law also determined the suspension of the holiday allowances paid to civil servants, to pensioners and to employees subject to teaching and research agreements.

    As it also occurred with the 2012 State Budget Law, the 2013 State Budget Law was, in this part, considered unconstitutional due to the violation of the principle of equality. In fact, the Constitutional Court considered that the sacrifices imposed on civil servants are in breach of the principle of equality, since no equivalent sacrifices are imposed to the private sector employees. Although recognizing that broader tax measures were adopted affecting the private sector employees, the suspension of the holiday allowance payment, together with the salary reduction applied to civil servants, was considered to be in breach of the principles of equality and proportionality and of the fair distribution of public burdens. The abovementioned Decision also considered that the suspension of the holiday allowance payment to civil servants cannot be justified based on the country's economic situation.

    As regards the unconstitutionality of the suspension of the holyday allowance payment to pensioners, the Constitutional Court sustained that the violation of the principle of equality...

To continue reading

REQUEST YOUR TRIAL