Portugal’s tax department has collected €1,918 million of tax debts from customers threatened with seizure of assets.
The coercive tax system in 2013 has the dubious honour of having collected the most money ever in the history of this often brutal and inflexible collection method.
The Ministry of Finance announced on Wednesday that the tax authority collected more than € 1,918 million of tax debts where the taxpayer was threatened with the loss of assets such as vehicle, family home and furniture.
Finanças employees will be rejoicing too as part of their remuneration results from a percentage of the amount of overdue taxes collected in this way.
The ministry reports that this value is 73% above the target of €1.1 billion and in a gleeful statement added "the previous highest figure occurred in 2007 when coercive collections amounted to approximately €1.6 billion. The value collected in 2013 exceeds the value of 2007 by 19%, or €300 million.
"This result demonstrates the increased effectiveness in enforcing the payment of tax debts and combating tax fraud and is the result of modernisation and reforms in the Portuguese tax authority in the past three years."
The amount collected will help reduce the deficit in 2013 but takes no account of the additional cost to the state of a tax department that has an incentive to refuse extended payment terms beyond two years, and of letting business fail with the resulting unemployment. There are a social costs too as many taxpayers are driven to bankruptcy as a result of these ‘coercive collections.’
The tax department’s closing comments on the matter were that “the result of the coercive collection system in 2013 is key to ensure a more fair and equitable tax system in the economic and financial situation facing the country contribution."
Those on the receiving end talk of intolerance, inflexibility, Finanças’ refusal to enter into sensible discussions mainly duetot he fact that Finanças office employees share a proportion of the tax collected by coercive means so have a perverse incentive to expedite coercive ‘solutions’ rather than agree other more fitting options that could keep businesses running and householders in their houses.
The ministry is overseen by Finance Minister Maria Luis Albuquerque who said that "the Government will continue to focus on combatting the shadow economy and tax evasion. The reform of invoicing started in 2013 will continue to be developed."
The statement also notes that during 2014 the tax department will reinforce numbers in the Large Taxpayers Unit which was started in 2012 and monitors large Portuguese companies responsible for about 60% of the total tax revenue in Portugal.
The Secretary of State for Fiscal Affairs, Paul Nuncio explained that the government’s objective is to increase the number of managers who directly track large companies.
