The timing is ideal and the governmental context opens the door to tax reforms where needed as desired by entrepreneurs and national industry associations. During the debate as part of the Dinheiro Vivo conference “Covid, war, inflation: how to adjust taxes in the OE2023”, which took place yesterday at the Centro Cultural de Belém in Lisbon, António Saraiva showed some optimism about possible changes. The president of the CIP (Confederação Empresarial de Portugal) recalled that the government has a majority and probably the parliamentary support of some parties regarding changes in tax policy. But, he emphasizes, “it takes willpower and courage.” For now, the chief of the CIP has hinted that there will be a pleasant surprise in the fall in the IRC rate.
“I am convinced that we will be pleasantly surprised when we present the budget soon” [do Estado] with this potential cut in IRC’s nominal rate from 21% to 19% and cross-cutting.”
The simplification of the tax system was another message from the participants in the debate. Its complexity, they argued, deters investment, especially since it hurts success. For example, the entrepreneurs present are demanding simplification that will help companies and the economy to grow. “We prefer taxes to be simple things,” says Gonçalo Lobo-Xavier. Only in this way, believes the general manager of APED (Portuguese Association of Distribution Companies), will companies be able to give more to employees.
“We need a tax system that encourages efficiency and counteracts state sanctions,” added Pedro Ginjeira do Nascimento. The Secretary General of the Business Roundtable Portugal Association (BRP) believes that the current system is hurting growth and success, not just for companies, but for the whole country.
Tax policy is not a “magic solution”
The opinion of businessmen contradicts the position of the Secretary of State for Tax Affairs, António Mendonça Mendes, at the opening of the conference. In his speech, the governor devalued the role of fiscal policy, which he says is “not a magic solution”.
According to him, problems such as rising inflation or high energy costs are not solved by taxes, but by accelerating the energy transition, using the support from the Recovery and Resilience Plan (PRR). “I appreciate the PRR’s actions on these issues more,” he said.
As for the state budget (OE), Mendonça warned Mendes businessmen “not to think that the state budget will solve the problems of companies and the country”.
On the business side, Lobo-Xavier responds: “Companies don’t expect that either. What they hope is that the OE won’t cause more problems.”
António Saraiva adds that the state should only have a regulatory role and should “get out of the way”. So far, he emphasizes, we have seen the state hand companies at the mercy of the covid context, war, energy, etc., “and companies are exhausted with their coffers”. The chairman of the CIP admits that the government can temporarily help businesses to overcome difficulties, but then they have to let them find their own way.
State restructuring is needed
For Carlos Lobo, a state organized in a Napoleonic way and on a 19th-century model is the national portrait that needs to be changed. Without this structural change, the country will hardly be able to pursue a tax policy that better meets current needs, says the former State Secretary for Tax Affairs, who attended this conference as a keynote speaker.
“The structure evolved much faster than the structure of the state. When we talk about the fiscal shock, it’s not just about taxes, but also about restructuring the state,” he says. And illustrates. “Whenever the government meets in those task forces to solve a problem, it shouldn’t be the exceptional action model. It should be the regular model.” The inspector also believes that Portugal has the natural ability to adapt to situations, but there must be a signal and mobilization.
Source: DN
