From 1 April 2019, the tax authorities will tell Portuguese taxpayers what the taxes they pay are spent on. A transparency initiative that is likely to be much appreciated. Who has not heard or made himself at least once when he is declaring his taxes in Portugal, France or elsewhere: where do my taxes go and what are they used for?
Lack of transparency can give rise to doubts and misunderstandings about the tax system, its usefulness, and I personally find the initiative very good.
Distribution of taxes in Portugal
The tables on the use of tax revenues will be available on the same day the deadline for IRS tax returns in Portugal begins. And this will allow the Portuguese taxpayer to see, for example, that the taxes collected by Portugal are used :
- At 23% for social protection
- At 17% for health
- At 13% for education
Finance Minister Mario Centeno said it is important to show Portuguese citizens what they are paying for and that they understand their role and involvement in the community. The State acknowledged at the Citizenship Tax 2.0 conference that other more complex issues on taxation in Portugal were regularly brought to the forefront and that this simple question of tax distribution was being left in the background.
The Portuguese Government was dissatisfied with its response to taxpayers regarding their various questions on this issue of tax redistribution, hence this initiative.
Another measure to improve communication with taxpayers has already been announced by the tax administration in Portugal (AT). It foresees the creation of a taxpayer support and defence service. The service will not only have a dimension of support for voluntary compliance with tax obligations, but also a dimension of support for the activation of the taxpayer’s means of defence and the handling of complaints.
Historic record tax burden in Portugal
The tax burden reached a new all-time high last year. It reached 35.4% of GDP, according to data from the National Statistics Institute (INE), one percentage point higher than the previous record of 34.4% in 2017. This is the highest figure since 1995.
Total revenue from taxes and social contributions amounted to 71 357.3 million euros last year, compared with 67 027.5 million the previous year. Taking into account only total tax revenues (taxes on income, production, imports and capital), the total value is EUR 52 221.9 million, higher than the EUR 49 077.7 million collected in 2017.
The concept of the tax burden used by INE is the sum of the revenue from taxes and social contributions of general government and the European Union (EU), excluding imputed social contributions.