As part of the budget presented to parliament on Thursday, the centre-right government of prime minister Luís Montenegro is aiming to reduce income tax for young people.

People earning the average salary of just under €20,000 (£16,700) currently pay a 26% rate of tax on the money they earn over about €16,500.

Under the government’s plan, those aged 35 and under who earn up to €28,000 (£23,400) would pay nothing at all in tax for the first year. The tax burden would then progressively increase over ten years.

The measures would also apply to foreigners. They are the result of a compromise between Montenegro’s Democratic Alliance-led government and the Socialist Party (PS), which originally came up with the proposal earlier this year.

In recent years, foreigners have flocked to Portugal, lured by its affordable rents, mild weather and natural beauty.

In the capital Lisbon and the southern Algarve region, the number of so-called “digital nomads” has shot up. Their high salaries have driven rents up considerably - often pricing out local Portuguese.

Low salaries in Portugal are also an issue. The minimum wage is €870 (£727) and, at €1,640, the average salary is one of the lowest in Europe.

As a result, many young people routinely choose to leave. Around 30% of Portuguese aged between 15 and 39 - about 850,000 people - now live abroad, according to data from the country’s Emigration Observatory.

The prime minister has previously promised that his government would “give young people the future they deserve”.

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Youth minister Margarida Balseiro Lopes told Portuguese media that while the measure had a high financial cost, “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”.

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