The Left Bloc’s Catarina Martins successfully has called on former and current Tax Authority bosses to explain to parliament how Portugal’s richest families pay a modicum of tax while the rest of us stump up the full whack or risk losing our homes.
The fictional 'low taxes for rich bastards' scheme became fact late last year when former tax boss José Azevedo Pereira let slip during a TV interview that there indeed was a two tier system that enabled thousands of the richest families in the country proportionally to pay less tax than Portugal’s hard-working, but no so wealthy, contributors.
Former Tax Authority boss José Azevedo Pereira and the new head of the Tax Authority Helena Borges will be heard "urgently" in Parliament to explain the situation.
This application to ‘invite’ the two tax chiefs to parliament was presented last December by Left Bloc leader Catarina Martins whose firey style and deft questioning will leave the tax department’s hierarchy in no doubt as to her opinion of a policy that has seen Portugal’s rich get richer while the country’s less fortunate taxpayers struggle to pay for basics.
According to Pereira’s comments on a SIC News programme; in 2014 (the year he left the Treasury) there was a special tax team that had identified about a thousand high income families which paid around 1/500th of taxes due if their income was taxed normally.
These super-rich families each had incomes above €5 million and held €25 million or more in assets.
"In any country that takes taxation seriously, this group of high earners would guarantee about 25% of the year's income tax receipts," according to Pereira. In Portugal, this group contributed to just 0.5% of the total income tax received by the Treasury.
The Left Bloc says that this situation raised doubts as to the credibility of the tax system and that it must be clarified.
The Left Bloc’s application for a hearing in parliament included the assertion that there was “a perception of inequality in the tax system with the rich paying less. This has contributed to a general feeling of distrust of the entire tax system. The information revealed now shows that this perception is well founded as it has been identified by our own Tax Authority."
The new Secretary of State for Fiscal Affairs, Fernando Rocha Andrade, confirmed that the special tax team no longer existed and undertook to update parliament on the findings and evaluation of the ‘legislative failures’ that cause this group of super-rich to pay nominal taxes. He has yet to do so.
José Azevedo Pereira said that this group of rich citizens pays a lot less tax than they should but much of this may be to do with their enthusiastic use of ‘legislative and administrative instruments’ designed to avoid, rather than evade, the full tax rates normally applicable.
While the 'rich vs poor' debate rolls on, readers might care to muse over the tax breaks offered to already wealthy non-EC foreigners who, using Portugal's Golden Visa scheme, pay no tax at all on overseas income for ten years - and then can move on.
During this tax free period, such visa holders have no obligation actually to live in Portugal - many of them do not as, perhaps not believing their luck, they can register in Portugal and then enjoy living in Paris, Munich or Rome, anywhere in fact within the Schengen Area.
Why there already wealthy foreigners are not taxed while Portugal's nationals and residents are, is a question that parliament could usefully debate now that the Golden Visa scheme's cheerleader Paulo Portas is no longer in power and confusing the word 'investment' with 'purchase.'
Comments
Does this confirm that the delay nowadays in processing Golden Visa's really is that the other more advanced / better opportunity countries were previously objecting to Portugal letting in bandits? And that now more rigorous testing is required by these countries even at the expense they go elsewhere.