Council of Public Finance says OE has “significant risks” – publico

                 

                         
                     

                 

 
 

The excess of optimism in economic forecasts, anticipating too high gains from indirect taxes and the estimated significant savings with measures that are not sufficiently specified make the draft state budget submitted by the Government contains “important risks “defended on Tuesday the Board of Public Finance in its OE proposal analysis to 2016

the organization led by Teodora Cardoso back to express serious doubts about the credibility of the estimates made by the Government, pointing to there are risks in almost all major components of the document already approved by Parliament in general and currently under discussion in the art. macroeconomic scenario, expenditure restraint measures, tax revenue forecasts and control investment in local and regional administration, everything is put in question the analysis of the CFP to OE.

When in January published its opinion to the draft state budget, the CFP had already analyzed the government forecasts for the economy, considering the rather risky. In particular pointed to an excess of optimism regarding the evolution of external demand in a very uncertain international situation and for not accounting for the effects on the competitiveness of Portuguese products due to higher expected inflation.

now, as based on the final proposal of the Government to the state budget (which includes the amendments negotiated with Brussels), the CFP continues to say that the government forecasts for the economy continue to contain risks, while recognizing that they are now ” mitigated by the amendments made. “

So, when analyzing the credibility of the budget estimates, on both the revenue and expenditure sides, it is natural that the CFP see the macroeconomic scenario on which to base all accounts government one of the main risks, especially because this is “particularly relevant to support forecasts of tax revenues”.

But, in addition to development of the economy, other risks are identified in the budget estimates. The organization led by Teodora Cardoso shows particular concern with the expected development of revenue from indirect taxes, precisely the one that was change target because of measures added by the Government during the negotiations with the European Commission.

the report of the CFP considers that the increase in tax rates as those on tobacco use or purchase of vehicles, the executive should take more account of the effect it causes on consumption. The CFP says that “in the case of indirect taxes, does not seem to be taken into account the likely reaction of economic agents to reduce the quantity demanded of goods on which focus significant increases in taxation”, warning that this kind of behavior of consumers “means an increase of less income to what would result from the simple application of the new rate to the amount previously traded. “

on the expenditure side, are also highlighted many questions. Against a backdrop of spending increases driven by the reversal of wage cuts or the end of the freezing of pensions, the CFP see little reason in the budget to believe that the saving measures that the Government has as compensation result.

entity that oversees the Portuguese public accounts says that these measures “are not specified enough,” warning that should be inserted “in a multiannual framework for the realization of efficiency gains, pushing the usual assessment that service improvements necessarily imply more resources instead of the more efficient use of existing resources. “

Another question in expenses is related to the appropriations are planned for social benefits, which are provided” very small increases for 2015 that appear not line with measures to explain this contention. “

in terms of investment, once again the CFP doubts the government’s ability to meet the containment predictions. In this case, it is noted that the Government wants to accelerate the implementation of EU funds in the new EU framework, but at the same time projecting a decline in public investment this year, only increasing in the case of regional and local administrations.