The Technical Budget Support Unit (UTAO) says that it is “mission impossible” to evaluate the budgetary impact of proposals relating to the reduction of the IRS, as requested by the Budget, Finance and Public Administration Commission (COFAP).
“[…] With due respect to the members of COFAP, the UTAO concludes that it faces a mission that is impossible to carry out,” states the coordinator of that technical unit, Rui Baleiras, in a letter sent to the deputies, pointing out as reasons the defined deadline, the lack of information resources and opportunity costs.
According to UTAO, “a professionally serious exercise of budget forecasting on any of the legislative proposals does not fit in 15 consecutive business days (weekends included)”, and in this case, seven legislative initiatives that propose changes in several articles of the Tax on the Income of Physical Persons. Code (IRS).
Thus, he argues, even if that unit “stopped all other production and fully dedicated its five human resources to this work (four analysts and the coordinator) for 15 consecutive days, it would never be able to deliver a technical evaluation rigorous enough not to induce error in the political discussions of legislative initiatives in committee or in plenary session.
Another reason given is Lack of information resources necessary for evaluation.since “the calculations require microdata from the most recent IRS campaign” and “UTAO does not have access to the microdata bases of the Tax and Customs Authority (AT).”
Furthermore, “even if it were possible to access it, the fact that it is outdated due to so many legal changes that have been made in the meantime would make the database itself useless.”
Finally, UTAO points out the opportunity costs for justify the impossibility of responding to the deputies’ requestmaintaining that the human resources available “are scarce and their responsibilities are large and diverse.”
“Even if there were no time and information restrictions, the UTAO would have to confront parliamentary political power with production that would cease to exist to transfer all the installed capacity to carry out this separate study, not foreseen in its activity plan,” he highlights.
At the outset, it points out that the “total allocation of the installed capacity” of the unit to carry out the study requested by COFAP “would prevent the publication of the analysis of the budget execution of the first quarter of 2024 in public accounting and subsequently postpone the completion of the study separate document, also requested by Permanent Commission V, on salary progressions for non-senior teaching staff and workers in other professional careers.”
Rui Baleiras ends the letter by recalling that, in a March 2022 report, the UTAO proposed a reform of the unit’s statutes that would allow, for example, the constitution of “a small permanent group” of three or four analysts “dedicated to separate studies, with sufficient flexibility and training to advise COF/COFAP on positive and statistical analyzes of the economic and budgetary effects of fiscal policy measures.”
“Without the creation of these institutional conditions and the understanding by political powers that technical support studies need time to be useful for political decisions, these unpleasant situations of ‘impossible missions’ will be repeated in the future,” he warns. .
“Therefore, I ask that in the coming months a dialogue between COFAP and UTAO is possible so that we can bring the reform of UTAO to fruition,” adds the coordinator.
These are the proposals approved by the majority of PS, BE and PCP on the IRS and the requests to reduce the proposal of the Government, Chega and IL to the specialty without a vote.
The Government’s proposal provides for an additional reduction of between 0.25 and 3 percentage points in the rates that apply to the first to eighth income brackets, with the largest decrease (3 percentage points) affecting the sixth bracket. In the ninth tranche, the rate remains unchanged.
The PS project advocates steeper reductions in IRS rates for the lowest income brackets (between 1,000 and 2,500 euros gross per month), while the PS project BE the increase in the value of specific deductions (on work and pensions) and the deduction of property charges up to 360 euros, as well as the elimination of the rule that prevents people with a mortgage loan taken out after 2011 from benefiting from this deduction.
PS proposes further reduction of IRS rates in lower income brackets
Already the one of PCP insist on mandatory inclusion of income subject to special and liberating rates, such as rent, capital gains or interest, for those in the higher brackets, also proposing an increase in the specific deduction and its update according to the NIC, the reduction of the rates that apply to the first two brackets and the worsening of which affects the highest income strata. A new one is also created for income greater than 250 thousand euros per year, with a rate of 56%.
The Chega project, on the other hand, proposes a more substantial reduction in tax rates until the eighth step — leaving only unchanged that of the 9th, which corresponds to the highest income bracket, while that of the ILLINOIS It proposes an increase in the specific deduction, a reduction in tax rates (considering only two levels) and sets the minimum subsistence level at the equivalent of 14 national minimum wages at current value (820 euros).
Chega proposes income of up to a thousand euros exempt from the IRS and “level adjustment”
Source: Observadora
