Big Brother ratchets up the heat on income tax declarations

After controversial moves designed to force banks into reporting clients holding over €50,000, news today is that Portugal’s tax authority is to adopt new IT mechanisms which will give inspectors much more freedom to double-check people’s financial situations.

According to national tabloid Correio da Manhã, the new software will act as a kind of fiscal “Big Brother”, and enable the taxman to “identify situations of risk” – instances, for example, where income tax returns do not reflect the contents of citizens’ bank balances.

It will be a system of alert, says CM, to complement the diploma authorising access to accounts with over €50,000, and still awaiting presidential approval.

The paper explains this has been “the solution” to the rampant controversy the issue has generated.

As a government source told the paper, “it will really be a computer that accesses data”, not a painstaking AT tax authority employee.

The ‘matrix of risk’ will sound the alert when bank balances grow year-by-year, without declared income supporting them, explained the source – adding that “when the risk matrix flags a red light, the AT (tax authority) will be able to see if there are reasons to suspect tax evasion”.

The plan is now apparently awaiting President Marcelo’s return from his trip to America.

(Marcelo has already declared himself to be dubious that the move to access accounts holding more than €50,000 is even constitutional).


Meantime, the “hysteria” generated by press stories on the government’s proposal to introduce a new tax on IMI rateable values above €500,000 (click here) continues to reverberate, with even committed Socialists coming out against it.

Madeira’s regional governor Miguel Albuquerque (PSD) has already vowed to ignore the tax if it does become law, but now Sintra’s PS mayor Basílio Horta has said it could set off a domino effect within the Socialist Party that could “take the country to misery”.

“The worst thing that could happen to the PS is to create an idea of radicalisation of the party,” he explained.

Horta’s reasoning comes from the fact that the new tax is believed to have been spearheaded by the Bloco de Esquerda – one of the two left-wing parties propping up Portugal’s Socialist executive.

Yesterday, in a bid to calm the growing controversy, BE MPs pointed out that the new tax would only affect 1% of ratepayers (43,888 people) and at its highest scale – for properties with rateable values in excess of €1 million – this would fall drastically, affecting only 8,618 rates bills.

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