Carlos Moedas once again took his proposal to exempt from IMT payments all young people up to 35 years old in the process of buying their own house up to 250 thousand euros. The opposition, which is the majority in Moedas' executive, rejected the measure, arguing that it would only benefit 3% young people. The discussion of this issue took up more than an hour of the meeting and divided the left and the right in the Lisbon City Council.
When buying their own home, new owners have to pay two taxes to the municipality: the IMI - Municipal Property Taxwhich will be charged annually, and the IMT - Municipal Property Transfer Taxwhich is charged only in the acquisition process. In the case of Lisbon, these two taxes make up a significant part of the municipality's annual revenue; in 2022, represented an increase of 398 million euros in the municipal coffers.
For this reason, the proposal that Carlos Moedas took for the second time to the executive meeting only talked about exempting from IMT the houses up to 250 thousand euros purchased by the young people up to 35 years old. The measure could represent savings of up to 8.3 thousand euros and should cost 4.5 million euros - a small slice of the 272 thousand euros of IMT revenue in 2022.
"It is incomprehensible how, having such a propagated concern for youth housing, we cannot take this step and put by a measure that benefits young people above parties. We hope that the interest of young people can prevail."Filipe Anacoreta Correia, the vice-president, said when presenting the proposal to all the members of the city council. "We will be saying that we, the City Council, do not want to collect this tax. We want young people to buy homes in Lisbon and we are willing to waive our revenue."
The measure - which, this time, was presented within a broader package dedicated to housing - was again rejected with only seven votes in favor, from the members of the Novos Tempos coalition, and 10 votes against (PS, PCP, BE, Livre, and Cidadãos Por Lisboa). The discussion and voting happened at the public town hall meeting on March 30.
The Opposition's Arguments
In general, the opposition parties with seats on the executive of the Lisbon City Council (PS, Livre, PCP, BE and Cidadãos Por Lisboa) did not understand the resurgence of the IMT exemption proposalThe councilors without portfolio agreed on the measure, reaffirming their positions of four months ago, when the measure was first considered in a city council meeting. The councilors without portfolio agreed that the IMT exemption would benefit a small portion of young people and they claimed that the municipality's investment should be in other types of measures.
Patrícia Gonçalves, of Livre, said that the party cannot "follow up on this proposal" because she doesn't explain how many houses there are up to 250 thousand euros in Lisbon, in what conditions and who are the young people that could buy them, stating that there are other ways to support housing with the same budget as the IMT exemption. O Livre did a search on Idealista, one of the largest real estate search engines in the country, and identified that, in Lisbon, only 8% of the ads on the platform are for houses and apartments up to 250 thousand euros. Cross-referencing this with data from INE, he extrapolated that this plateau represents 0.3% of the city's current housing stock and 2% of vacant housing.
Of the houses up to 250 thousand euros identified in Idealista, Livre found that the average gross area is 54 square meters, that the average price is around 207 thousand euros, that most of these houses are one bedroom houses, and that there is no elevator. The party also addressed the access to housing credit, pointing out, with some simulations, that for a minimum effort rate of 33% of monthly net income, the wages of young buyers should be between 3255 and 3876 euros - a reality of 3% of Portuguese young people up to 35 years old, according to Livre based on a recent study by the Francisco Manuel dos Santos Foundation. "Is this how the councilors of the PSD, CDS and New Times independents intend to solve the housing crisis in Lisbon?"Patrícia Gonçalves, who took over the party's council at this meeting in substitution of Rui Tavares, questioned.
Free presented three alternatives to apply the 4.5 million euros that would cost the IMT exemption measure and the 100 million foreseen in the reinforcement of the IRS devolution in the whole term: for 862 new homes for Affordable Rent, for 3800 beds in university residences, and for the rehabilitation of 4543 municipal housing units.
João Ferreira, for the PCP, criticized the Mayor for presenting the IMT proposal while saying he doesn't "measures such as the creation of limits on the acquisition of houses by real estate funds in areas with a declared housing shortage, limitations on local housing, the suspension of tax privileges similar to the long overdue elimination of Gold visas, or measures in the area of leasing to control rent increases even in new contracts". The communist councilman also made a presentation at the town hall meeting, showing, for a case of a 220 thousand euro house, that the IMT would represent a "discount of 2.57% from the total price of what you have to pay for the house"considering all the taxes for the purchase of a house.
"Is it these 2,57% that make the difference between a young person being able to settle in Lisbon or not?"he questioned. "For an overwhelming majority of young people it's not this not this discount that was going to make the difference because they wouldn't have the resources to get to that €228,000. And for another small portion of young people who would have the money to move towards this, it's not the 2.57% that's going to make the difference to the decision between buying I don't buy the house."argued João Ferreira. "In other words, the overwhelming majority can't afford it, and those who can afford it buy it with or without a discount."
To João Ferreira, "much more than the IMT"There are other barriers to buying a home, namely house prices due to real estate speculation, and he provided data: according to different indicators, housing prices in Lisbon have seen a growth of about 60% in the last five years, which means an average annual growth of about 10% and that the house a young person would buy for 220,000 this year was priced at 135,000 euros five years ago in 2017. The PCP noted that if the price of that young-example's house had followed the evolution of the Consumer Price Index, it would have had a growth of 14%, i.e., it would have gone from 135,000 euros in 2017 to approximately 155,000 euros in 2022 - an increase of 20,000 euros.
"We are saying this to show that there is something that is a much, much bigger barrier to young people being able to have homes in Lisbon than the one you identify."summarized the communist councilman. "With the average price growth that houses in Lisbon have had in recent years, it only takes less than half a year - if we kept up the pace of price increases - for the discount you are proposing in IMT to be swallowed up by real estate speculation."
For the BE, Ricardo Moreira, who replaced the councilwoman Beatriz Gomes Dias in this meeting, said he was astonished that Moedas considers that the exemption of IMT "is the top priority" and recalled that four months ago, "there was a majority in this House that considered this to be a bad proposal". "That same day a rental subsidy for young people was approved, where is it? A subsidy to support student residences was also approved on that same day, where is it? This young people's IMT measure was flunked and on the same day there were two that were approved, where are they?"questioned the bloquista councilman, accusing Moedas of having "the priorities so, so switched that you don't know who you govern for anymore. But let me say that governing for 3% of the city's young people seems a bit low to me.". "This is a measure against 97% of young people," added Ricardo Moreira during his speech.
For the PS, the IMT exemption for young people up to 35 years old "in the way it is presented it is not central" and it is "a wrong policy for a real problem that is the lack of housing at prices people can afford in Lisbon"said the PS councilor, Inês Drummond, also arguing that "it's the wrong time" for this proposal, because "focuses public response on the use of home loans at a time when interest rates are getting higher and higher". "It is also a socially unjust measure because it benefits a very small minority and above all because it excludes those who do not have 1000 to 1200 euros to pay a monthly installment. It is designed to support those who need it least".he said.
Inês Drummond questioned the lack of follow-up proposal presented by his party in November 2022 to create a municipal income support program for young people up to 35 years oldThis idea was approved by a majority as an alternative to the IMT exemption. With an allocation of 4.5 million euros, this proposal aimed to reinforce the rental subsidy already existing in the municipality's housing policies in order to "cover much younger"without the constraints of the current program, allowing support of between 300 and 450 euros per young person. To Drummond, "There are first and second class proposals. The first ones are the proposals that you, Mr. President, and the councilors in charge, bring to the city council meeting and that are announced three days before in the press as if they were a foregone conclusion. And then there are the second-rate proposals, which are those that you don't intend to comply with and which are presented by the opposition councilors.. For the PS councilwoman, "this situation of permanent non-compliance with the deliberations of the Council with which you, Mr. President, do not agree erodes the democratic basis of the functioning of the municipality and the regular functioning of the elective bodies. You, Mr. Mayor, have to stop behaving like the master of all this and start respecting the democratic rules..
In his turn, Rui Franco, from Citizens for Lisbon, referred that, "agreeing on the merits of supporting youth housing response"IMT exemption is not the way and that "dispensing with that recipe" you are at the same time concentrating "saving in a very small fringe of upper-income youth". He also added, in a second intervention, that he and his fellow councilors without portfolio were "elected with an electoral program that does not advocate this"where "the majority of lisboans and their elected representatives defend an option that is contrary". "The minority with portfolio has all the legitimacy to defend what it has already defended in its electoral program but that position is in the minority and that is why it will not pass with all democratic loyalty"Rui Franco, who was elected through the coalition More Lisbon (PS+Free).
Coins' answers
In response to the various interventions, Carlos Moedas regretted that "fellow councilors" defend "one part of society against the other" and to create "social frictions all the time"instead of doing "a policy that serves society as a whole". "I can never be accused of not being tolerant and of not governing for everyone, least of all Councilwoman Filipa Roseta [Councillor for Housing]. She's one of the most humane people I know and everyone knows she's real"he added.
The Mayor highlighted his packages for social housingone of 42 million euros with the municipal company Gebalis and another of 85 million jointly with the central statethrough its Housing and Urban Rehabilitation Institute (IHRU) and the Ministry of Housing. "So, 125 million euros for municipal districts." In a moment of irritation, directed at the opposition, Moedas stressed that "there is a limit to your arguments", "when we have 125 million that are going to be applied to municipal districts and you here are accusing us that with the IMT measure we are doing a huge, huge evil...". "And nobody talks either about the university residence in Alameda that we are building with 300 beds or the 900 beds that we are studying. Nobody talks about this"said Moedas, regarding several criticisms from opposition parties that the Mayor have taken part at the inauguration of a private residence for foreign students that has rooms starting at 700 euros a month.
Carlos Moedas added that the IMT exemption "has always existed" for houses up to 90 thousand euros, recovering the State Budget law for 2011 which stipulated that "the acquisition of an urban building or autonomous fraction of an urban building destined exclusively for own and permanent habitation whose value that would serve as the basis for liquidation does not exceed 92,407 euros are exempt from IMT".. It was a measure that "taken over by parties on the left and right". "What happens is that with real estate speculation the prices have been increasing and what we are trying to do is to keep up with that increase, because the 90,000 euros - I don't have the numbers here, but it was around that - no longer corresponds to anything today." The Mayor also said that the Socialist Youth proposed to the Government the IMT exemption also for young people up to 35 years old and houses up to 250 thousand Euros nationwide, in the context of the program More Housing.
Reacting to some of the data presented, Moedas defended himself by arguing that it is reductive to survey Idealist to get an overview of the city and advanced that "to make this proposal we analyzed data from the Tax Authority, which told us that 45% of [property purchase] transactions are under €250,000"corresponding to about 1500 transitions. The Mayor did not specify, however, the time interval, age group and geographical scope of this data, nor did he make this information available to opposition councilors. But, in a clarification sent to Lisboa Para Pessoas, the municipality explained that these are data from the Tax Authority for the year 2021; the total number of transactions carried out by young people under 35 years of age in the municipality of Lisbon in 2021 was 3196, of which 1457 concern transactions whose tax base is equal to or less than 250 thousand euros.
Patrícia Gonçalves, from Livre, immediately clarified that in the analysis carried out by her party, "we used the data we have from one of the largest aggregators of houses and that is data that you can also consult, but the data that you have we cannot consult". Therefore, "we would like you, Mr. President, and the Alderman in charge, to make the data you have from the Tax Authority available for all the councilors who are here".
In closing, the Vice President accused the opposition of giving up on young people. Filipe Anacoreta Correia said "the councilmen have truly given up on young people, they have given up on young people who work and have savings, on young people whose parents have savings, they have given up on the dream of young people buying houses". "Please don't tell young people that only rich people can buy a house in Lisbon. But also don't tell them that you think it's okay for the City Council to keep this tax when they are making this sacrifice, this dream of buying a house."asked. "Do you realize what a message this sends to the young people out there who dream of buying a house in Lisbon? Have you come across the perplexity?"criticized the also Councillor for Finance.
The opposition's counter-responses
The PS and PCP made, at the end of the discussion of the subject and using the time they still had to speak, comments about the values presented by Carlos Moedas and Filipa Roseta. Inês Drummond reminded the current Councillor for Housing that "after the years when we had the City Council broke and had to recover it, we had the largest municipal housing investment program worth 52 million euros for five years" - 10 million more than the now announced package of 42 million for Gebalis. "It's so much easier to look back when we're sitting on 340 million from the RRP and say we're now going to do the biggest housing program"Drummond criticized. João Ferreira thought "important to clarify so that people understand" what the 42 million package is about. The communist councilman explained that it is a program contract of the Lisbon City Council with its municipal company Gebalis, which authorizes it to spend 42 million over five years and in 66 municipal districts of this city, "where a fifth of the city's population lives". "It is not, Mr. President, anything extraordinary. Whoever was in that position before you, had a program contract with a similar value and that was even slightly higher. The problem is that it was not all executed, but that's another problem."said João Ferreira. "Of those 42 million euros, in this year 2023 you only have about 11 million euros to invest to intervene in six - and only six - of the city's 66 municipal districts. Note: 11 million euros out of a total of 42, but which you still have to hold for five years."
"But in this year 2023 alone you, Mr. President, have given the same 42 million euros, the same 42 million euros, in tax relief to the 20% wealthiest residents of this city with the IRS refund measure"added the PCP councilman. "You ensured that the 20% of wealthier city residents had collected 42 million euros, the same as you propose to spend in five years on 66 municipal districts where one-fifth of the city's population lives. We are talking about the class policy of this municipal administration. It is not a policy for everyone. It is not a policy for those who need it most. It's a policy for that tiny, most benefited minority in the city."
The IMT exemption measure for young people up to 35 years old and houses up to 250 thousand Euros was rejected, despite being included in the Municipal Housing Charter - a strategic document, presented at the end of FebruaryThis is the first project of its kind in the city of Lisbon, launched by Councilwoman Filipa Roseta, which enshrines the entire Lisbon municipal strategy in this field.
Updated at 12:10 on 11/04/2023: added clarification from Lisbon City Council on the Tax Authority's data on house purchases by young people in the city.
