The Finance Ministry has no shame in paying its tax collection staff a percentage commission for all money retrieved by methods of ‘coercive collection.’
This year a delighted Minster of Finance has agreed a 5% commission for Finanças staff meaning that extra taxes will have to be raised to recoup the 5% she has just given away.
The 2014 ‘coercive collection’ process, whereby debtors are threatened with losing their assets including house if they do pay up, raked in €1.148 billion, marginally ahead of the target €1.1 billion.
The number of seizures has doubled to over two million between 2012 and 2014 partly as a result of this bonus culture combined with the government's blind dash for cash at the expense of common sense and fair treatment.
The pressure on staff to hit this target of course has meant that any payment plan proposals from debtors have been ignored and cars, bank account balances and property has been seized and sold off, often at a fraction of its worth on the open market.
Tax workers union boss Paulo Ralha said that his members will not be sharing the €57 million as much of the amount goes into the Tax Stabilisation Fund, a euphemism for fun days out and get-togethers at the taxpayers’ expense under the heading of 'Training.'
The folly of this coercive collection system is twofold. Firstly, the taxpayer often is reduced to homelessness, despair and economic stasis when he or she could have managed to pay off the debt over time while remaining economically active, and secondly, tax staff therefore are being encouraged financially to behave in a manner that often does not best serve the interests of the public.
This news came at the same time as the Government passed a measure which now leaves the decision to seize and repossess with the local tax office chief.
Opposition parties and consumer rights organisation DECO have lobbied for further changes in the law making it illegal for the state to seize the debtor’s principal home. This will encourage payment plans with a higher tax take in the long term and less homelessness.
The use of the ‘coercive collection’ system by the tax department on behalf of commercial companies such as the road toll concession holders also is abhorrent to many as the state machine is being wielded to collect private debts with tax staff benefitting directly.
Toll companies therefore have managed to avoid the use of the country’s courts to recover debts by an agreement with a complicit government which has allowed the tax authority to be used for a purpose for which it was not created.
One concession to humanity recently put in place by the government is the devolution of decision making to local tax office chiefs as to whether they seize and sell off debtors’ homes.
This still is fraught with problems as local tax office heads know local people and thus are open to corruption, the receipt of illicit payments and pressure from family and business networks to ease off certain debtors and pursue others without further discussion.
