Portugal with heaviest tax burden in Europe

Portuguese workers and retirees will have the heaviest tax burden in comparison to the five richest countries in Europe -Germany, Spain, Italy, France and the UK – with pensioners fairing the worst in 2013, concluded a study by consultancy firm KPMG.

The report comments that according to the simulations, the discrepancy is particularly prominent for retirees with income over €300,000 a year. Germany appears as the most attractive country, with an effective tax burden of 24.4% for a couple of retirees with no children and income over €300,000.

In comparison, the same amount in Portugal would be taxed at 64.2%, almost three times more. In real terms this would mean in Portugal, after taxes and surcharges, the couple would keep €107,471 of the income, while in Germany the recipients would keep €226,930.

Also facing a severe economic crisis and having to implement austerity measures, Spain would tax the same amount at 44.9%, the second heaviest tax burden from the ranking.

The report concludes that this particular tax burden is due not only to the IRS (income tax) hikes but also to the extraordinary solidarity contribution, one of the specific 2013 State Budget points that the President of the Republic Cavaco Silva has sent to the Constitutional Court (see last week’s edition and cover story in pages 4 and 5).

||Retirees fight tax hike in court

The president of the national association of retirees and pensioners (APRE!) Maria do Rosário Gama believes that the population of retirees is currently being “pillaged”, announcing the intention to fight the tax hikes in court.

Rosário Gama says: “We feel we are being pillaged because, as a matter of fact, what is being done to retirees is robbery. We will fight against it, we will go to court.”

In a statement to Lusa news agency, Rosário Gama commented on recent news reports (see story above) that with the new tax hikes Portuguese retirees will be subjected to more taxation than retirees in Europe’s richer countries, such as Germany and France. “We hope these measures are declared unconstitutional. We are really hopeful that will happen but are also thinking about filing lawsuits,” she said.

The APRE! president added: “The cuts coming in 2013 are brutal”, criticising the decision to “tax the poorest and the ones who aren’t able to go on strike” and who will have to adopt “other strategies” to make the Government change its mind on the tax hikes.