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Tax expenditures and redistribution - The case of Portugal

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  • Christl, Michael
  • Berdeal, Silvia Navarro

Abstract

This paper assesses the fiscal and distributional effects of personal income tax expenditures in Portugal using EUROMOD and 2022 EU-SILC microdata. We compare the 2023 tax-benefit system with a counterfactual scenario in which tax expenditures are removed to estimate first-round impacts. We find that tax expenditures account for almost 40% of personal income tax revenues and predominantly benefit middle- and higher-income households, with large variation in redistributive effectiveness across instruments. While the Net Minimum Income Guarantee is progressive and cost-efficient in reducing inequality, most work- and pensionrelated allowances deliver limited equity gains, suggesting scope for reform.

Suggested Citation

  • Christl, Michael & Berdeal, Silvia Navarro, 2026. "Tax expenditures and redistribution - The case of Portugal," GLO Discussion Paper Series 1705, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:1705
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    References listed on IDEAS

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    1. Julio López‐Laborda & Carmen Marín‐González & Jorge Onrubia, 2022. "The removal of tax expenditures from Spanish personal income tax: Impact on tax collection and income distribution," Public Budgeting & Finance, Wiley Blackwell, vol. 42(2), pages 221-254, June.
    2. Holly Sutherland & Francesco Figari, 2013. "EUROMOD: the European Union tax-benefit microsimulation model," International Journal of Microsimulation, International Microsimulation Association, vol. 1(6), pages 4-26.
    3. Holly Sutherland & Anil Gupta & Ann Harding, 2007. "Model 10: EUROMOD — The Tax-Benefit Microsimulation Model for the European Union," International Symposia in Economic Theory and Econometrics, in: Modelling Our Future: Population Ageing, Health and Aged Care, pages 483-488, Emerald Group Publishing Limited.
    4. Holly Sutherland, 2007. "Model 10: EUROMOD — The Tax-Benefit Microsimulation Model for the European Union," International Symposia in Economic Theory and Econometrics, in: Modelling Our Future: Population Ageing, Health and Aged Care, pages 483-488, Emerald Group Publishing Limited.
    5. Altshuler, Rosanne & Dietz, Robert, 2011. "Reconsidering Tax Expenditure Estimation," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(2), pages 459-489, June.
    6. A. Turrini & J. Guigue & A. Kiss & F. Lanterna & A. Leodolte & C. Leventi & F. Neher & A. Papini & F. Picos & M. Ricci & K. Van Herck, 2025. "Tax Expenditures In The Eu: Recent Trends And New Policy Challenges," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission, vol. 24(3), pages 7-17, November.
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    Keywords

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    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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