The Technical Budget Advocacy Group (UTAO) says assessing the budgetary impact of IRS cut proposals by the 23rd, as required by the Commission on Budget, Finance and Public Administration (COFAP), is a “mission impossible.”
“[…] With all due respect to the members of COFAP, the UTAO concludes that it is faced with a task that cannot be accomplished,” states the coordinator of this technical unit, Rui Baleiras, in a letter sent to the deputies, citing as reasons a certain deadline, lack of information about resources and alternative costs.
According to UTAO, “professionally serious budget forecasting for any legislative proposal does not fit into 15 consecutive working days (including weekends),” and in this case, seven legislative initiatives proposing changes to a number of personal income tax articles. Code (IRS).
Thus, he argues, even if the unit “shut down all other production and dedicated five of its human resources (four analysts and a coordinator) to this task for 15 straight days, it would never be able to conduct a technical assessment rigorous enough to not lead to errors in political discussions of legislative initiatives in committee or in plenary session.”
Another reason is the lack of information resources necessary for the assessment, since “calculations require microdata from the latest IRS campaign” and “UTAO does not have access to Tax and Customs (AT) microdatabases.”
Moreover, “even if it could be accessed, the fact that it is out of date in the face of so many legislative changes that have been made during this time would render the database itself useless.”
Finally, the UTAO points to opportunity costs to justify its failure to respond to the MPs’ request, arguing that the human resources at its disposal are “insufficient and their responsibilities are large and varied.”
“Even if time constraints and information resources did not exist, UTAO would have to confront parliamentary political power with a production that would cease to exist in order to displace all installed capacity for carrying out this separate study not provided for in its operating plan”, highlights.
From the outset, it states that the division’s “full installed capacity allocation” to conduct the study requested by COFAP “prevents the first quarter 2024 budget performance analysis from being published in the public record onwards.” postpone the completion of the study of a separate document, also requested by the 5th Standing Committee, on increasing the salaries of teachers without higher education and workers in other professional professions.”
Rui Balheiras concludes the letter by recalling that in a report dated March 2022, UTAO proposed a reform of the division’s charter, which would, for example, allow for the creation of a “small permanent group” of three or four analysts “engaged in selected studies.” , with sufficient flexibility and training to advise COF/COFAP on the positive and statistical analysis of the economic and fiscal implications of fiscal policy measures.”
“Without creating these institutional conditions and understanding among policymakers that technical support research takes time to become useful for policy decisions, these unfortunate ‘mission impossible’ situations will be repeated in the future,” he warns.
“I therefore call for dialogue to be possible between COFAP and UTAO in the coming months so that we can bring the UTAO reform to a successful conclusion,” adds the coordinator.
We are talking about proposals approved by a majority of PS, BE and PCP by IRS, as well as demands from the government, Chega and IL to reduce the proposal to a specialty without a vote.
The government’s proposal provides for an additional reduction in rates applicable to income groups 1 and 8 by 0.25-3 percentage points, with the largest reduction (3 percentage points) affecting the 6th group. In the 9th grid the bet remains unchanged.
Project PS advocates for steeper reductions in IRS rates for the lowest income groups (€1,000 to €2,500 gross per month), while Project BE calls for increases in the size of specific deductions (for work and pensions) and the property expense deduction. up to 360 euros, as well as the abolition of the rule prohibiting people who received a home loan after 2011 from taking advantage of this deduction.
The PKP insists on mandatory inclusion of income subject to special and liberal rates, such as rent, capital gains or interest, for those at the top of the ladder, and also proposes an increase in the specific deduction and its updating depending on IFRS. reducing the rates applicable to the first two groups and increasing the rates applicable to the highest income groups. A new one is also created with an income above 250 thousand euros per year with a rate of 56%.
The Chegi project, on the other hand, proposes a more significant reduction in tax rates to the 8th group, leaving unchanged only the 9th group, which corresponds to the highest income group, while the IL project proposes to increase specific deductions, reduce tax rates (from taking into account only two levels) and establish a minimum living wage equivalent to 14 national minimum wages at the current level (820 euros).
Author: Lusa
Source: CM Jornal
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