Thursday, November 10, 2016

Rate of 20% on the underground economy would pay the budget of the Health – Jornal de Negócios – Portugal

The weight of the economy not registered (ENR) in the official GDP the Portuguese returned to increase in 2014 and 2015, rising already the 27,29%. According to the index released this Wednesday, November 9, by the Observatory of the Economy and Fraud Management (OBEGEF), returned, in percentage and in euros, to the values that preceded the rescue of the troika in 2011.

The sum of the illegal economy, hidden (subdeclarada or underground), informal, production for own use and which is not acquired by deficiencies of statistics is about 49 billion euros. If it were applied at a rate of 20%, could be charged close to 9,800 million euros in taxes, “that corresponding to the Health budget or the interest of the public debt,” said Óscar Afonso, one of the authors of the update of the index, the pair of the phd student Cláudia Gonçalves.

On the results presented this morning at the Faculty of Economics of the University of Porto (FEP), the researchers projected that, in the case of Portugal be able to reduce the weight of the shadow economy for the OECD average (16.4 percent), and by applying an average rate of tax of 20%, in 2015, Portugal would have registered a deficit of 0.85% and would go out of the procedure for excessive deficits.

Taking into account that we can measure, in the Portuguese case, the weight of direct and indirect taxes and Social Security contributions are the main cause of the ENR, which in 1970 represented “only” 10,17% of total wealth official produced by the Portuguese. Óscar Afonso, who leads the OBEGEF, stressed that, “more than concrete values, the crucial to retain with respect to its increasing trend”.

Among the suggestions for combating the ENR, the authors of the update of this index include the controversial criminalization of enrichment, “punishing heavily the agent in acquiring goods in manifest does not comply with the income tax declared and without that if you know other means of acquiring lawful”. The fight against abusive use of conventions of double taxation is another of the proposed measures

The “impunity” of the pardons and useless “repression” of the Tax authorities

In the list of the main immediate consequences of this phenomenon are the distortions in the competition between the companies, with Óscar Afonso the detail that “contributes to the fact that prices are still above costs, reducing the amounts transacted”. His predecessor, Carlos Pimenta, stressed that the Portuguese economy is embedded in the international economy, and that “we must not look to these increases solely as a result of internal policy”.

“The second factor [structural to the trend of increasing ENR] is that, stated in common language, the crime pays off. Those who do not pay taxes or commits fraud, in general, have greater competitive advantages in the market. If nothing is done – and, despite everything, a lot has been made – there is a tendency to systematically increase in a result of this automatic growth, which was the comparative advantage of not paying taxes, in comparison with the competitors,” added Carlos Pimenta.

The pardons tax mean primarily a legalization of money laundering, although it often does not prevent the police authorities continue to investigate the source [of the money]” Carlos Pimenta, the creator of the Observatory of Economy and Management of Fraud

Criticizing the pardons tax made in recent years by governments aimed at repatriation of capital “means primarily a legalization of money laundering, although it often does not prevent the police authorities continue to investigate the source [of the money]” –, the creator of the Observatory insisted that even this new ongoing program to settle debts to the Tax office and the Social Security system “exacerbates the feeling of impunity”.

Pepper regrets the fact that there is a favourable evolution in the degree of citizens ‘ confidence in the application of the tax revenues and the functioning of the Tax authorities. And also that the last responsible in the Ministry of Finance have opted for the “repression”, that “there is a lot if you consider that is not the way to resolve things.” Is that, he explained, “the intensification of the machinery of tax administration (…) until it has an effect of breaking a human face on the Finances, which has created some distrust in the people who have to pay taxes”.

Who studies the “moral tax”?

The “father” of the Observatory of Economy and Management of Fraud disputes that, without this analysis, there is no conditions for “a combat effective, long-lasting and structural” tax fraud.

The founder of the centre for Economics and Fraud Management (OBEGEF) pointed out that there are almost no studies in Portugal regarding the moral tax, something that is today very much in vogue and that helps to understand how each citizen reacts in relation to tax matters and that is what determines it. That is, it is not known exactly what influences this behavior of the citizens – much less to the companies and criminal organizations. In the two work already carried out, one in Lisbon and another in Porto, “the results are still very limited and very disciplinary, and this requires the consideration of other categories of sociological and psychological needs that have not been considered”. “No one even bothered with this. This is decisive for the fight against fraud. Without having an idea of the morality of tax in Portugal, we do not have conditions to make a combat effective and long-lasting structural and tax fraud,” concluded Carlos Pimenta.

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