Portugal was the country that most increased taxes on low wages – Diário de Notícias – Lisbon

Only Denmark and Iceland have seen increases higher

Portugal was the OECD country that most increased the tax burden for workers with low incomes in 2015, with the organization stating that the introduction of the tax credit in that year took progressivity to the taxation of labour.

in A report on tax reform in 2015 released today, the Organization for Economic Cooperation and Development (OECD) concludes that, “after several years of annual increases”, the tax burden on the worked has stabilized at the average of the countries of the organization.

however, with regard to workers with low incomes, the tax burden on labour “down slightly,” among the OECD countries, a reduction which turned out to be small, by having been annulled by the increase in a number of countries, that Portugal leads.

According to the organization headquartered in Paris, the increase of the tax burden for workers with low incomes grew by close to 1.5% in Portugal between 2014 and 2015, leading the table, while in Austria (the second largest climb) was near 1% and in Luxembourg (the third largest rise), which the OECD also highlights, a little above 0.5%

“The increase in the tax burden on workers with low income was particularly high in Portugal, where the tax credit system has become less progressive,” says the OECD in a report released today.

In the State Budget for 2015, the Government PSD/CDS-PP, led by Pedro Passos Coelho, has maintained the 3.5% surcharge on the IRS applied amounts of income over and above the national minimum wage, but has introduced a tax credit that would allow for making reparation, the whole or part of the collection of the surcharge for the year 2015.

however, this relief was dependent on revenues from VAT and IRS this year, since the formula of calculation of the tax credit considered the difference between the sum of the revenue from these two taxes effectively levied, and the sum of the revenue of the two taxes estimated for the whole year in the State Budget of 2015.

At the beginning of 2016 – the year that the report still does not include the taxpayers did not receive any refund of the surcharge paid in 2015, because the revenue growth from income tax and VAT during the year fell short of budgeted.

With the State Budget for 2016, the Government PS led by António Costa has decided to eliminate the surcharge on the IRS for taxpayers in the lower level of income and make it progressive to the levels following, keeping it unchanged at 3,5% for incomes above 80,000 euros a year.

According to the Stability Programme 2016-2020, presented in April, the Government plans to introduce in 2018 a tax credit to low-income families. In question is the assignment of a supplement to the salary of the low income households which, although accounted for income from employment, continue to live below the poverty line.

according To the report of OECD, Portugal is also the first places of the table (fourth) among the countries that most increased the weight of taxes in Gross Domestic Product (GDP) between 2010 and 2014, in line with Greece, with an increase of close to 4 percentage points.

Only Denmark and Iceland have recorded larger increases, of between 5 and 5.5 percentage points.