The cutting measures spending on intermediate consumption and an increase in indirect taxes that were announced by the previous government in the state budget for 2015 did not produce the desired effect of consolidation of public accounts, concludes the Council of Public Finance (CFP) .
in the analysis of public accounts 2015 report, the entity headed by Teodora Cardoso notes that some of the major fiscal consolidation measures planned for this year have produced a final result that, or fell short of provided, or was it the opposite of the plan.
This conclusion is drawn, ing on the expenditure side and the revenue. On spending, the CFP states that “budgetary consolidation measures do not seem to have produced the purposes of the OE / 2015 once throughout the year various items showed reinforcement needs of its budget, especially personnel expenses and intermediate consumption “.
in the document, in particular it is pointed out what happened to the measures to reduce intermediate consumption expenditure to ensure the ongoing operation of public services.
OE, the government led by Pedro Passos Coelho had announced as a measure to consolidate a cut of 179 million euros in expenditure on studies, reports, projects, consulting and other specialized work. However, says the CFP, “according to provisional information on cash accounting, referring to the universe of public administrations, the total of these expenditures has increased EUR 172 million (20.7%).”
The CFP also notes that the EO also provided a cut of 190 million euros with “other sectoral measures.” Completed the year, the entity that evaluates the evolution of public accounts “were not properly specified, except it be for this reason can assess their level of implementation.” The CFP therefore recommends that the construction budgets, “is specified the nature of each measure and its impact on items of revenue and expense classifiers.”
On the revenue side, the scenario is similar. The now published report says 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 the draft State Budget for 2015.
the CFP estimates that the level of income, “the result of execution achieved by the measures in the MF did not exceed 66%” and that “excluding the measure on the modification to the tax model of the game, none of the other achieved the objectives set. “
Among the measures that failed the targets, emphasis is given to the end of the IMI safeguard clause, the reform of the Green Taxation and increments of Special Taxes Consumption. It was here, says the CFP, which saw the largest deviations, which were eventually accommodated by increased revenue verified at the level of tax on real estate sales (IMT) and VAT.
The CFP takes to post a warning about the risks that exist to predict a large increase in revenues at the level of special consumption taxes, saying that the decrease in the tax base caused by the rate of increase has two effects. One is “the desired change in the behavior of business and citizens”, the other is the “negative effect on public revenue.”
If the analysis now made concerns the State Budget execution for 2015, many these issues are likely to be put also on the State budget execution for 2016. in the fiscal consolidation measures foreseen by the present government for this year, cutting the costs of intermediate consumption and the increase in rates in the Special consumption Taxes have a weight very significant. And in previous reports, the CFP has warned about the insufficient details of presentation of some measures and the risk of having a very strong increase in revenues from indirect taxes.
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