Government receipts suffer worst year since 2003

THE PORTUGUESE state’s ability to collect taxes suffered its worst downturn since 2003 and threatens the country’s economic recovery.

The rate of receipts to the state in the first three months of 2008 confirms the government’s difficulties in collecting taxes, according to admissions by the Directorate-General of Taxes.

Tax receipts grew 2.8 per cent in the first quarter against increases of 9.6, 6.8 and seven per cent registered in the first quarters of 2005, 2006 and 2007 respectively.

With the Portuguese economy showing signs of considerable slowdown, although not bordering on a recession, it is likely to now be impossible for the Finance Minister, Fernando Teixeira dos Santos to lower Value Added Tax from 21 to 20 per cent as he suggested at an American Club luncheon three weeks ago.

In the 2008 State Budget, the Finance Minister was predicting a tax receipt growth of 3.8 per cent.

The actual rate of 2.8 per cent achieved so far has sent alarm bells to economists and financial and political analysts that the Portuguese state will have a tough time sticking to its objectives of bringing the Portuguese state deficit down below three per cent.

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