The Spanish government's plan to raise taxes from 2022 is becoming an isolated case in southern Europe. The Portuguese socialist government of

António Costa

has already presented a stability program to

Brussels

in which it promises to

lower the tax burden until 2025

and rules out touching the main taxes both this year and next.

The conservative Greek government

has announced a set of tax cuts "to reactivate the economy"; and

Mario Draghi's

Italian

finalizes his Recovery Plan without having foreseen any tax increase so far.

For the Government of

Pedro Sánchez,

the fiscal attitude of Costa is especially sensitive, as it is also socialist and disputes foreign investments in the Iberian market. "Regarding budgetary policy, next year fiscal stability will be guaranteed in the main taxes, with emphasis on the measures to reactivate the economy", is assured in the so-called

2021-2025

Stability

Program presented last 16 by the Portuguese Government and accompanying the

Recovery Plan

submitted to the EU.

It foresees a downward fiscal pressure until 2025, falling from 34.2% of the current Gross Domestic Product to around 33% from 2022 and in subsequent years.

It is the so-called "tax burden" in the program that computes, as usual, the weight of taxes and social contributions in the economy and which is currently below the Spanish one.

The Portuguese socialist government does not defend, like the Spanish, that it has to equate its collection levels to the European average and uses its lax tax policy to attract foreign investment.

The Portuguese Minister of Finance,

João Leão

, declared in the presentation that "in terms of fiscal policy, next year fiscal stability will be guaranteed and priority will be given to measures to reactivate the economy."

"The Ministry of Finance does not foresee tax increases next year," a spokeswoman for the Portuguese Department confirms to this newspaper.

After the strong reorganization that it had to carry out after the European rescue of its economy, the imbalance in its public accounts is much lower than in Spain. It foresees a public deficit in 2021 of 4.5% - compared to 8% in Spain - to fall to 3.2% in 2022 and practically already then comply with the traditional rules of the euro. This situation, according to João Leão, is the result of the country registering a budget surplus the year before the pandemic, which created “conditions to confront a crisis of these dimensions with confidence and with a very strong economic recovery program. next year". In 2019, Spain registered a rise in the public deficit to 2.8%, breaking a long sequence of reduction.

As for the Government of

Kyriakos Mitsotakis

, of

the European People's Party

, it announced on Thursday a battery of tax cuts and reductions in social security contributions in an attempt to boost the economy in the post-pandemic period.

Prime Minister Kyriakos Mitsotakis announced five measures targeting workers and businesses during a teleconference on the revival of the Greek economy.

Among them is a reduction in Corporation Tax.

It will be permanently lowered from 2022 from the current 24% to 22%.

In Spain it is 25%.

In addition, Mitsotakis

extends until 2022 the current reduction by three percentage points in Social Security contributions

paid by private sector workers. He also keeps taxes on wealth introduced by his predecessor Alexis Tsipras on hold and also cuts tax payments on account.

“The Government has shown that its constant priority is to reduce taxes before, during and after the pandemic.

And our first concern after the fight against the health crisis is the rapid recovery of the economy and for this we announced today five measures that will be the basis, the foundations, for a resolute return to recovery.

And they will allow companies that have suffered losses during the pandemic to return to the positive path, "said the prime minister.

The tax cuts subtract income in the short term, but Mitsotakis sees them profitable for the public coffers due to the dynamization of the economy that they imply.

"At the same time, they are measures that will provide liquidity to the economy and attract investment," he bet.

According to the criteria of The Trust Project

Know more

  • Taxes

  • Portugal

  • economy

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