Portugal is due to introduce a massive new incentive targeted at young people and expats as they try to stop people from moving elsewhere.
The centre-right government announced on Thursday new tax cuts for under-35s in an attempt to dissuade them from emigrating and attract foreigners to settle in the country.
Prime Minister Luis Montenegro wants to see income tax lowered for this age bracket, specifically those earning up to €28,000 (£23,400).
He wants to introduce the new scheme that would see these earners paying nothing in tax for the first year before it progressively increases over a decade. This is projected to cost €650m (£544m).
Currently, those earning the average wage of just under €20,000 (£16,700) pay 26 percent income tax on money earnt over about €16,500 (£13,808).
In a move that would also benefit expats, Montenegro wants the tax cuts to apply to foreigners as well, encouraging them to move to Portugal permanently.
The country’s weather and affordable rent have attracted foreigners in recent years, but many are put off by its low wages. The minimum monthly wage is €870 (£727) and the average monthly salary is €1,640 (£1,372) – one of the lowest in Europe.
This issue has also been exacerbated by “digital nomads”, accused of driving up rent prices and pricing out local Portuguese people from their neighbourhoods with higher purchasing power.
Consequently, young people in the country are deciding to move abroad, some 850,000 people ages 15 to 39, according to Portugal’s Emigration Observatory.
Previously, Montenegro said his government would “give young people the future they deserve”. He said: “We need young Portuguese people to seize their skills and put them to work on projects and work for the country.”
Youth minister Margarida Balseiro Lopes added: “The cost to the country of having the most qualified generation ever, fleeing and leaving and emigrating, is incomparably higher than the financial cost of the measure.”
The measure will only go through if the Socialists abstain or the far-right Chega party endorses it, but this may not happen in the vote on the country’s budget set to take place on October 31. If the budget doesn’t pass, Montenegro’s government could collapse after only six months in power.