“Why do we have so many taxes? Portugal has one of the highest tax burdens in Europe that strangle [Sic] business and who produces. This tax system has already generated more than 2 million poor people. to whom it produces and everything for what it withdraws? To pay for social parasitismpay for corrupt politicians’ reforms, pay for an absurd machine of political burdens, taking money from families and companies, mortgaging the future of our young people”, it is alleged in the video concerned, published on May 18 on the official pages of the Chega party on social networks.
“Social parasitism” is associated with images of currents of archetypes of ethnic minoritiesresulting in a message racist and xenophobic. And in the developed political group, it wants to end taxes, relieve those who produce and work Portugal on the return route, the future for Portugal and the Portuguese.
Is it confirmed that “Portugal has one of the highest tax burdens in Europe”?
According to the latest Eurostat datastatistical service of the European Union, the level of revenue for taxes and social contributions in such services of the Gross Domestic Product (GDP) in Portugal it’s not the highest among the 27 Member States of the European Union.
In fact, it falls in the middle of the table in 2020, in the 13th positionwith 37.6% (below average of the European Union which is 41.3%).
At the top of the Eurostat table, these countries stand out, such as Denmark47.6%), France (47.5%), Belgium (46.2%), Sweden (43.6%), the Italy (43%), Austria (42.6%), Finland (42%) or Germany (41.5%), all above average of the European Union.
The provisional data for 2021 foreshadows that the relative position of Portugal in this area should not undergo significant changes, although it may increase to 38%.
tax revenue vs.. tax burden
It is also important to emphasize here the difference between tax revenue and tax burden, which often gives rise to misunderstandings. The tax revenue corresponds to the values in the State coffers that come from the mandatory tax payment by the population contributions as contributions of each citizen for Social Security. It encompasses, in total, direct and indirect taxes.
In turn, taxation consists of calculating the contribution between the total contributions of the population mentioned above (including Social Security contributions) and GDP in a given period of time. That is, it is the collection of the weight of tax revenue and contributions for Social Security on goods and services generated in the country for a year.
The biggest tax burden ever
Moreover, despite not being one of the highest burdens among the 27 Member States of the European Union in comparison (using the Eurostat formula), Portugal’s tax burden has increased in recent years, breaking successive records.
On April 8, the National Statistics Institute (INE) published the latest report card of “Tax Revenue Statistics”, noting that “in 2021, the tax burden increased by 7.1% in nominal terms, reaching 75.6 billion euros, which corresponds to a 35.8% of GDP (35.3% in the previous year)”.
“Revenue from direct taxes rose 2.2%, mainly reflecting the evolution of income from personal income tax (IRS), which grew by 5.7%. Social contributions grew by 6.9%, reflecting, in particular, the growth in paid employment and the rise in the minimum wage. As selected in 2020, as measures for the protection of, remuneration and the progressive reconstruction of the activity, it also explains the positive evolution of income from the IRS and social contributions. On the contrary, income from corporate income (IRC) fell by 6.6%”, tax informed by INE.
On the other hand, “indirect taxesordinary 10.6% increaseconstituted a component that more financed to increase tax revenue. Revenue from value added tax rose by 13.4% (a 10.6% reduction in 2020), with the growth in revenue from tax on petroleum and energy products (7.7%). There were also increases in revenue from the municipal tax on transfers of real estate (+37.1%), with the stamp tax +10.4%) and with the municipal tax on real estate (+2.1%). Tobacco tax and electric vehicle tax 0.1% and 3.0%, respectively.”
And if the tax burden in 2020, at the level of 35.3% of GDP, had already been the tallest ever (as a proportion of GDP) in INE records, evidently that of 2021 – 35.8% of GDP – sets a new maximum.