Portugal's Municipalities Are Asking for 25.3 Percent of State Tax Revenue Instead of 19.5, and Expect to See the New Local Finance Law by the End of November
ANMP president Pedro Pimpao says the current share dates from the troika-era 2013 amendment and no longer makes sense. The association also wants a cut of fuel taxes and of the Fundo Ambiental, and sight of the draft before anyone else sees it.
Portugal's municipalities currently receive 19.5 percent of the taxes the state collects. The National Association of Portuguese Municipalities wants that raised to 25.3 percent, and it expects to have a draft of the law that would do it in its hands by the end of November.
Pedro Pimpão, the mayor of Pombal who leads the ANMP, told ECO's Local Online that the association has now met twice with the working group the government set up in April to rewrite the Lei das Finanças Locais, and has a commitment that a final version will exist before the end of the year. What it is asking for first, though, is procedural: sight of the text before anyone else sees it.
"What we demand, if that is the right word, what we defend, is that before it is presented publicly in its final version, there should be prior knowledge for the National Association of Municipalities," Pimpão said. "There is that commitment on the part of the working group, so that the association can give its view while the working group is still running."
The number that matters
The 19.5 percent figure is not an accident of drafting. It is the level set when Pedro Passos Coelho's government amended the local finance law in September 2013, replacing the version that came from José Sócrates's government in 2006, which had been sponsored by the then Interior Minister António Costa.
Pimpão's case is that the troika-era settlement has outlived its reason. "We are talking about a law from the time of the troika, with a set of constraints that we think no longer make any sense at all," he said. The ANMP is explicit that it does not want a tidying-up exercise: "It is a new local finance law, not just revisiting the law and making some circumstantial changes."
Beyond the headline share, the association wants municipalities to take a cut of taxes they currently do not touch. Pimpão named petroleum products, tied to the cost of maintaining the road network, and the Fundo Ambiental. His argument on the second is about disasters: if councils are expected to build resilience against storms and fires, they need the money to reinforce their own structures.
From observers to participants
When the government created the working group in April, it wrote the ANMP and ANAFRE, the parishes association, into the decree as mere "observers", alongside representatives of several ministerial offices and the regional governments of the Azores and Madeira. That drew immediate objections from mayors.
Pimpão now treats it as settled. "It was a badly resolved matter. We felt we would be very useful if we were a permanent part of those working groups, but that is behind us and it has been resolved," he said. The mechanism that replaced it is the promise of a pre-final draft: "There is a commitment that as soon as the working group has a pre-final version of the report, they will send it to us so we can give our view."
A deadline that has already slipped once
The revision is late before it starts. The overhaul was originally meant to be in place well before now, and the government pushed it past its 2027 target in July. Luís Montenegro first set the objective in June 2024, weeks after taking office, promising a formula that would "give, in a transparent, predictable and fair way, the financial resources that municipalities need to exercise the competences attributed to them".
Pimpão says he would have preferred something faster, but that the ANMP is "in tune with that timeframe". His closing hope is modest for a demand of nearly six percentage points of state tax revenue: "Let us hope that at the end of November we can have a version so we can give our view effectively."
