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Portugal's tax amnesty a roaring success

financaslogoPortugal's 2013 tax amnesty saw €1.253 billion paid to the state by its debtors with the extension to the end of December encouraging payment of a further €400 million.

Altogether, the tax amnesty measure resulted in a cash inflow of €1.253 billion of which €763.5 million hit the state's bank account by the initial deadline of December 20th 2013, with an additional 40% paid by taxpayers in the extra days allowed to the end of that month.

The Secretary of State for Fiscal Affairs, Paul Nuncio, said that IRC and IRS payments generated the largest share, producing €720 million. Following these were indirect taxes such as VAT and stamp duty which harvested a further €210 million, and 'other taxes' such as IMI and car tax which generated a revenue of €90 million.

According to a statement by the Ministry of Finance, 319 000 taxpayers regularised their tax debts, of which 265,000 were individual taxpayers and 54,000 were payments by businesses. This has proved to be the largest and most successful debt settlement scheme ever held in Portugal.

These are not net figures as the state may have to repay part of the sums at later dates. This is because those who are in dispute took advantage of the discounts but later will argue their cases in court which may result in refunds.
 
The affect on the national deficit is marked. The 5.5% of GDP as agreed with the Troika now is assured. The €1.253 billion raised from the tax amnesty equates to a reduction in the deficit of 0.7% and the deficit now will end 2013 below the level required by the country’s lenders.

The government has promises not to run this scheme again and had been warned of the risk of easing the neeed for citizens to pay their taxes on time. To forgive interest and a significant portion of the fines to defaulting taxpayers may well have the affect of reducing the total owed to the government in the longer term which could have been received by the usual coercive measures.

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Comments  

+1 #1 Malcolm.H 2014-01-06 14:47
At least these 'new' taxpayers are now on the radar. Although it doesn't make sense why so many were not on it before.
It is the EU ultimately that suffers as subsidies and business support that could be going to poor but better run EU member countries and individuals comes to Portugal !

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