CES defends a “fair compromise between taxation for labor and capital”

  • ECO News
  • 13 October 2016

In the draft opinion to the Major Options of the Plan (GOP) the Economic and Social Council (CES) also “worries” about the sharp decline in public investment.

The Economic and Social Council (CES – Conselho Económico e Social) advocates for a more “fair compromise between labor and capital tributation”. This is one of the many considerations CES gives in their draft opinion about the Major Options of the Plan (GOP – Grandes Opções do Plano) for 2017.

The document was voted today and is still subject to amendment. The project criticizes tax policy, saying it became “largely a technique (as a Law) for generating income without duly pondering on the rationality and tax equity and fairness”.

Advisors recall there is “a relatively large class with low income, which leads to imposing high taxation that allows for a level of income compatible with the level of public expenditure and with fiscal criteria compliance”. Therefore, they see “Portuguese tax policy as conceived backwards”, starting from “the overall income to define the structure of that policy”, and they criticize the “major instability” deriving from it.

ECO had access to the preliminary document, and one of the many criticisms was that CES has serious reservations about the “sharp decrease observed in public investment”. CES also points out the dangers of implementing the Budgetary Treaty:

"Imposing a fiscal consolidation and debt reduction rhythm incompatible with a satisfactory economic growth (above 2%), makes for a major constraint to overcoming the economic crisis Portugal still faces.”

CES