Teodora Cardoso: decreasing IRS without a tax reform “would be a great mistake”
Teodora Cardoso, president of CFP, stated that an under control deficit should not justify decreasing taxes or increasing salaries without first implementing more structured reforms.
Would it be a good option to decrease IRS or increase salaries to civil servants, as is being discussed in the 2018 State Budget negotiations? “No”, answers Teodora Cardoso. “It would be a very serious mistake to go back on that road”, the president of the Portuguese Public Finance Council (CFP) stated. Yet, that does not mean there is no margin for decreasing any taxes or revising the careers of civil servants; it just needs to be really well though of, and not because the deficit is under control.
We cannot lower taxes or increase expenses simply because the deficit has been lowered. That will end badly.
During the presentation of a report on the Portuguese Public Finance from 2017 to 2021, CFP now projects a 2.7% of GDP growth for this year and believes the Government will surpass the 1.5% budgetary goal, ending the year with a 1.4% deficit.
Nonetheless, Teodora Cardoso considers “the problems are solved in the short term, but the medium-term prevails”. Therefore, it is not a good idea to “lower taxes or increase expenses simply because the deficit has been lowered”. “That will end badly”, she assures. However, “this does not mean it is not necessary to re-think taxes”.
Teodora Cardoso believes there may be some taxes that the Government decides to decrease, but because of their impact on the economy, such decreases would have to be carefully thought of in order to be “more favorable to the economic activity”. The same logic goes to expenses. Teodora Cardoso states it is “very necessary to think about public administration” by revising career progression for civil servants.
