Indirect taxes accounted for 75% of the increase in tax revenue in 2015 – iOnline

Indirect taxes ensured “three quarters of the increase in tax revenue, and contributed to the increased tax burden (not adjusted) of 34.1% to 34.4% of GDP.”

 
 

This is one of the main conclusions to be drawn from the Public Finance Council report (CFP) with the analysis of the general government account in 2015, released on Thursday.

 
 

The increased tax burden, after a year of almost stabilization reflects the increased weight of indirect taxes to 14.5% of GDP. But the weight of direct taxes decreased by only 0.1 pecentuais points to 10.8% of GDP. The social contributions stabilized at 9%.

 
 

The CFP begins by pointing out that the deficit stood at 4.4% of GDP in 2015, “exceeding the value set in the state budget for 2015 (2.7%),” a justified deviation mainly by Banif resolution operation.

 
 

In adjusted terms of temporary measures and one-off measures, the budget deficit fell to 2.6% to 3% in 2015 and the primary surplus increased from 1.3% to 1.5%. The CFP estimates, however, that the structural deficit was 1.8% of GDP, “interrupting the trajectory of improvement in recent years and represents an offset relative to the medium-term objective”.

 
 

But this reduction of the nominal deficit was only possible by the increase in revenue, which in turn was secured by 75% by indirect taxes such as VAT. “Direct taxes explained the rest, under IRC performance have more than offset the IRS break,” the CFP.

 
 

The Council chaired by Teodora Cardoso stresses, however, that “the revenue impact of the fiscal consolidation measures was less than expected, especially in indirect taxes, confirming the execution risk marked by the CFP in its analysis of POE / 2015. “

 
 

On the expenditure side, the fiscal consolidation measures “do not seem to have produced the expected effects” On / 2015 once throughout the year “several lines showed enhanced needs of the respective allocation orçamenta” l, especially personnel expenses and intermediate consumption.

 
 

The report also notes that spending, “contrary to that seen in 2014, recorded growth, mitigated by the favorable performance of interest expense”.

 
 

The capital expenditure was the largest contributor to the increase in public spending and the reduction of personnel expenses and “other current expenditure” was not enough to counter the growth of primary current expenditure, driven by spending on intermediate consumption and social benefits “.

 
 

Social contributions grew for the second consecutive year – after 0.4% in 2015, 1.7% in 2015 – due to actual contributions (+ 4%), “more than offset the decrease in contributions charged (-5.8%).

 
 

“The increase in social contributions revenue for social security (+ 4.4%) was decisive in the evolution of social contributions, which rose above the compensation of employees (+ 1.3%),” reads the CFP report, which also explains the decrease in contributions charged with “the purpose of the Loan by terminations Program Agreement, the basis of the total reversal effect of remuneration reduction applicable to civil servants salaries that occurred in the third quarter of 2014,” and “reduction in the number of subscribers to the General Retirement Fund (from 484,526 in 2014 to 473,446 in 2015).