After six months working to pay the state, workers in Portugal yesterday had their first ‘tax free’ day.
Portugal’s date on which its workers stop working for the state and start earning for themselves is not the latest in the European Union, but it has been increasing steadily.
In 2011, tax free day arrived on May 29th. Year on year the inexorable rise in VAT and Social Security contributions has pushed the date closer and closer to the start of summer.
The typical tax burden for workers in the EU shows that, with an average wage of €19,453 they receive €11,319, just 58%, the rest going to the taxman in income tax and social security contributions.
Portugal is number seven in the ranking, way behind Cyprus where the day its workers start earning for themselves is March 21st, followed by Malta and Ireland on April 28th.
The key date for Portugal has been getting later and later in the year since 2010, largely is due to the government, like others, resorting to the blunt weapon simply of raising taxes to fix the budgets and to pay interest on bailout borrowings.
Portugal this year and next has the pain of an accumulation of increases, old and new, to pick the workers’ pockets; hikes in the VAT rate, reduced deductions, reduced tax breaks, reduced income tax bands, the temporary income tax surcharge which seems to have become permanent, and social security hikes.
In 2013 the Portuguese paid €37.5 billion in taxes, this year the government aims to raise over €40 billion and is well on the way to doing so.
