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Towards a Less Distortive and More Efficient Tax System in Portugal

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  • Álvaro Pina

    (OECD)

Abstract

The process of fiscal consolidation and the need to step up the poor long term economic performance provide an opportunity to implement tax measures to improve efficiency and rebalance the economy. As consolidation progresses, switching taxes from labour to consumption and property offers an avenue to regain eroded competitiveness and to achieve employment gains, especially if the largest reductions of the labour tax wedge are targeted on low-wage workers. As the consumption tax base is particularly large in Portugal, such a shift could allow a sizeable cut in the tax wedge while still raising revenue, if needed. Productivity and welfare can be increased by simplifying the tax system, thus reducing the high compliance costs it imposes, especially on small and medium sized firms. Also, the tax system could be more environment-friendly by using it to further address transport-sector externalities, which are of particular concern in metropolitan areas. At the same time, the current tight budgetary pressures call for increased efficiency in tax collection. There is ample scope for base broadening through reduced tax expenditures in the major direct and indirect taxes, as well as in property taxation. This Working Paper relates to the 2010 OECD Economic Survey of Portugal (www.oecd.org/eco/surveys/portugal). Vers un système fiscal plus efficient et moins générateur de distorsions au Portugal Le processus d’assainissement des finances publiques et la nécessité de renforcer la mauvaise performance économique à long terme permettent de mettre en oeuvre des mesures fiscales pour améliorer l’efficacité et remettre l’économie sur une trajectoire de croissance. Au fur et à mesure que la consolidation fiscale progresse, le transfert de l’imposition des revenus du travail vers les impôts sur la consommation et sur le patrimoine offre un moyen de regagner la compétitivité perdue et de créer des emplois, surtout si les réductions du coin fiscal sur le travail se concentrent sur les titulaires de bas salaires. L’assiette des impôts sur la consommation étant particulièrement large au Portugal, ce transfert pourrait induire une baisse considérable du coin fiscal tout en augmentant les recettes, le cas échéant. La productivité et le bien-être peuvent être améliorés en simplifiant le système fiscal, réduisant ainsi les coûts de discipline élevés, en particulier vis-à-vis des petites et moyennes entreprises. De même, le système fiscal pourrait être plus favorable à l’environnement en s’attaquant aux externalités générées par les transports, qui sont particulièrement préoccupantes en zone urbaine. Parallèlement, les pressions budgétaires considérables exigent des gains d’efficience dans le recouvrement des impôts. Il existe de nombreuses possibilités d’élargir l’assiette en réduisant les dépenses fiscales pour les principaux impôts directs et indirects, ainsi que pour la fiscalité immobilière. Ce document de travail se rapporte à l’Étude économique du Portugal de 2010 (www.oecd.org/eco/ surveys/portugal).

Suggested Citation

  • Álvaro Pina, 2010. "Towards a Less Distortive and More Efficient Tax System in Portugal," OECD Economics Department Working Papers 814, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:814-en
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    File URL: http://dx.doi.org/10.1787/5km4m2w9hv28-en
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    More about this item

    Keywords

    coin fiscal sur le travail; corporate income tax; cotisations de sécurité sociale; coûts liés au respect de la réglementation; croissance de l’impôt; dépense fiscale; environmental taxes; impôt sur le revenu; impôt sur les bénéfices des sociétés; impôt sur l’environnement; impôts sur le patrimoine; labour tax wedge; personal income tax; Portugal; Portugal; property tax; social security contributions; tax and growth; tax compliance costs; tax expenditures; TVA; VAT;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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