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The Secretary of State for Tax Affairs says the Treasury is imposing "disproportionate" fines on road debts or private entities. Mendes Mendes advocates a reflection on the theme.
The Secretary of State for Tax Affairs does not assume that she is against it, but stresses the need to think about using the tax foreclosure process to collect non-tax receivables. The Tax Authority (TA) charges and executes taxpayers because of fines on the roads, some of which are "disproportionate", said António Mendonça Mendes during an interview with the Observer . These are non-tax debts, some of which are private, which, he says, are responsible for much of the litigation because taxpayers "think they are victims of abuse of the share of the tax administration ".
The Secretary of State suggests this reflection, following a question on the controversial Stop Operation – promoted by the tax authorities of Porto at the exit of a highway of Valongo, the A42, which is part of a former Scut (concession where he is higher). the percentage of non-payments). Mendes Mendes said he does not have data to confirm whether the debts raised with car seizure threat were tolls, but he guarantees that there will be compensation for taxpayers if it is concluded a fundamental right or guarantee has not been respected.
In the week in which the report on tax benefits was known, Mendonca Mendes says the government and parliament now have a model that allows them to be rigorous in assessing these benefits and in the decision to maintain or remove them based on the social or economic purpose. you want to reach. The reassessment of the tax benefits (FR) only advances in the next legislature, with the IRS to be presented as a priority, given the size of the revenues that the state ceases to collect. The Secretary of State reaffirms the principle of fiscal neutrality and the commitment to reduce the IRS by 200 million euros.
Regarding the so-called "tax treaties" granted by the regime of foreign residents, Mendonca Mendes indicates that this report reveals that it is also necessary to enter income, 80 million euros from the IRS, and recalls that the attacks to be measured "do not care if these people would be in Portugal" if the regime did not exist.
The report on tax benefits was presented at the end of the legislature. Where are we going from here?
This study initiates a systematic elaboration of tax benefits to prepare a new model of transparency in the creation and monitoring of tax benefits. There was a set of benefits that expire at the end of the year and were subject to re-evaluation. We assume that the gaps existed and today the government and parliament have more information.
When we create the tax benefit, we must define the goal we want to achieve. To do this, we must also define which indicators enable us to analyze whether we achieve the economic and social function of the benefit. The tax benefits mainly have an extra-tax purpose and have no function in the tax itself. If, initially, we do not exactly identify the goal we want to achieve and the task force points out 127 benefits that they themselves have not understood, it becomes even more important. more difficult to establish such indicators to carry out the evaluation work thereafter. But there are in fact many tax benefits, double tax elimination mechanisms or structural elements of the tax that, if they did not exist, encumbered the end customer.
The tax benefits are often the result of political discussions on the state budget, they do not have the technical justification that is now provided for. How to reconcile rigor in the framework of probable minority governments where these measures must be negotiated?
This report is addressed to all Portuguese, those who accompany public life and those who are responsible for the decision. I am not one of those who thinks there is us and them. We politicians are citizens and those who are predisposed to serve the public cause are the nodes that represent them. The responsibility of the political agents, whether in the government or the parliament, is equivalent. In tax matters, the right principle no taxation without representation (There are no taxes without representation). Taxes are decided by the representatives of the people and that is why the parliament has exclusive competence in tax matters. And the responsibility of the approver is as great as that of the proponent, be it the government or Parliament.
For example, we are looking in depth at the benefits of research and development. And every decision maker is satisfied when he realizes that for every euro lost in the collection, there is more than one euro invested in innovation and development. This tax benefit will apparently have worked.
He also reported that the IRS would also be a priority area for the consideration of benefits ….
We had already signaled plans to reduce the IRS by 200 million euros from next year. This year, we explained that this relief would be offset by the reassessment of tax benefits. We are talking about replacing bad budget spending with good fiscal policy instruments, we said from the beginning that we want neutrality. It is in the IRS and IRC that are concentrated more than 50% of the benefits and the vast majority of the associated tax burden. It seems logical that this is where we should focus our efforts.
The paper says that current tax benefits only affect half of the households that the IRS pays. Do you have an idea of what might happen?
It is too early and I have the responsibility not to condition the discussion. Secondly, it is not advisable to have an immediate legislative fury. We must be more demanding in the definition of public policies. Studies should be used to make good policy decisions and take the time to take them, rigorously evaluate new benefits, or maintain current benefits. As for the 11 benefits that expire, it's a practical question. It would be logical to start applying this methodology already.
Will there not be a temptation to increase state revenues without redistributing them?
From the beginning, we proposed that this exercise be neutral. If we exclude the option of reducing public spending, which can increase revenue without raising taxes, it is the fight against tax evasion and avoidance. But we can find in the tax system more effective ways of presenting these benefits without tax expenditure. Let's use the academic example you gave. The tax benefits of the IRS do not reach all the aggregates; the implicit conclusion is the reduction of rates of a progressive tax, which is already benefiting all. But without losing sight of the following: when we talk about outgoing budget expenditures, we may be talking about revenues that would never be in the system without this benefit. This more careful work is needed for a more just and efficient system.
One of the benefits that fits this logic is the tax regime of foreign residents. What clues does this report give us?
This scheme was presented as a tax expenditure. Every year we lose X million taxes – according to the working group, more than 500 million. He does not care whether these people would be in Portugal without this scheme. Nor do you have to say, of course, that we raised 80 million IRS last year, double what we had collected two years ago. And VAT is not accounted for because of what it consumes, neither IMT nor IMI.
When evaluating the efficiency of a system, we can not focus on a plot. We must look at all the surroundings. Being an important advantage from the point of view of tax expenditures, the other side of the coin is also clearly indicated here. The tax revenues that it creates in a situation where it was not this scheme would probably not exist.
Is this scheme justified as it exists?
It is not a question of redefining the benefits, but we think that some aspects of the plan need to be improved and we will have news soon. What is at stake is a first approximation of the value of the whole system and a set of indicators is suggested to enable it to do so more thoroughly. The preliminary assessment brings us other data that have not been used in the political debate, often think deliberately.
"I can not say that I have a tax glove for foreigners that costs around 400 million euros and I am unaware that these foreigners would never be in Portugal and that they also contribute millions of euros to tax revenues.It is important to find a balance. "
Or because they are not known ….
It is our duty to share information and we do it in a very transparent way with this report. It is this environment that helps to eliminate the tension that often exists in the political debate. There should always be alternatives, that is the tax policy. It is good that there are different points of view of the political agents, but all must start from the same information base. And if this happens, everyone has the obligation to act with the same seriousness in politics because they evaluate from the same assumptions.
I can not say that I have a tax glove for foreigners that costs around 400 million euros and I am unaware that these foreigners would never be in Portugal and that they also contribute money. millions of euros to tax revenues. It is important to find a balance.
Have you been surprised to learn that there are more than 100 tax benefits that have no definite purpose?
I did not stay, but I do not value too much either. We will probably have to look at them first. There are 127 benefits for which the extra-budgetary objective is not defined and for 120 others that are not classified. And in many cases, there is a problem with the classifier. But as part of this public debate, there will certainly be many people who will come and say what their purpose is.
But it must be specified what is the extra-budgetary objective …
Without the shadow of a doubt. I admit that many of these benefits are not tax benefits, but elements of tax structuring designed to eliminate double taxation and which are poorly categorized as tax benefits. It is this rigorous exercise that we can do with the exhaustive survey. But I'm not sure that there are not 543 tax benefits (the task force identified 542). I am sure that there was a very serious job. The task force identifies 60 legislative degrees giving rise to these 542 benefits, some of which may have been overlooked.
And we know that this number does not include the regions, nor the benefits decided at the level of the local authorities.
It was a choice made. As the option has been made, which seems to me correct with regard to the nature of the tax, do not place the reduced VAT rates. This does not prevent an individual assessment of VAT. In the context of the ongoing changes within the European Union with regard to the VAT architecture, it was interesting to note that in the next legislature we could examine this reality in order to better understand how preferential rates are used. The public disclosure of this file will ensure that every Portuguese has the right and the duty to examine these public policy instruments.
"But we can never forget that when someone does not fulfill his tax obligations, it results in an overload for those who comply with it.What we need to do is combine struggle against fraud and tax evasion and preserving in all circumstances and in a radical way the rights and guarantees of taxpayers, and we are not talking about anything that is the opposite. "
This work was difficult and the working group had a year. Is the Treasury able to make such a comprehensive assessment of each tax benefit?
We ensured that the Tax Studies Center and the Income Tax Officers were part of the group. Modernization and this new paradigm in which we want to focus on the relationship with the taxpayer are forcing us more and more to reorient our priorities. We have an excellent study center that should become a center of public administration skills with the ability to attract foreigners and collaborate with universities. It is the entity par excellence that should support the formulation of the fiscal policy of the Government of the Republic. And we have a proposal for the creation of a technical unit. Its framework is an interesting discussion as to whether it should be in the finance department or in Parliament.
He talked about the balance between taxpayers and AT. He had to suspend two collection operations: stop an operation on a highway in Valongo and carry out a marriage inspection. To what extent does the government control these operations? And there was a disapproval of the autonomy of the treasury?
Adhere absolutely to the autonomy of the tax administration. The government defines the tax policy and provides guidance to the TA, which manages, autonomously, the operational management of the tax system, in compliance with these directives. And there is nothing new in the government's guidelines on how to balance the relationship between the tax administration and the taxpayer. We are not starting this debate now. Throughout the legislature, we have taken many measures to increase the guarantees of taxpayers, we approved the ban on the sale of family properties in case of seizure of tax debts, we approved the waiver of the presentation guarantees for claims up to 5,000 euros of individuals up to 10,000 euros of companies. We are announcing the task force to improve the relationship with taxpayers.
These particular operations – Valongo and marriages – did not correspond to what the government defined as the norm of this relationship?
We had announced at the time that we were studying the assessment of TA assistance through the different channels. The study is over and is being evaluated to see what can be improved.
We have clearly explained the government's position on this particular issue. TA has to deal with revenue collection and there is a voluntary collection and a coercive collection. The Portuguese taxpayer standard is the standard of voluntary compliance and therefore, our efforts must be directed first and foremost to ensure that voluntary compliance is effective. But we can never forget that when someone does not fulfill his tax obligation, he overloads those who comply with it. What we need to do is combine the fight against fraud and tax evasion with the preservation of the rights and guarantees of taxpayers in all circumstances and in a radical way. And we are not talking about something that is opposed.
But these are general principles, I wanted you to tell me about these cases and their consequences. Are there any responsibilities at the central level of the tax authorities, considering that these operations were part of centrally sanctioned business plans?
These are not principles, they are guidelines to follow. And we must have a level of demand when we want to know what has really happened. I'm waiting for the results of an ongoing audit. What is more important at this point is to see if there is a right or guarantee of these taxpayers that has not been fulfilled. It's essential
And there will be consequences?
There will be a consequence of reparation for the wounded. It seems obvious to me. Now, even from the point of view of those who fulfill public functions, anticipating scenarios without having objective data that allow them to do it … I perceive people's anxiety, but I would like to contribute to that all the Portuguese realize that we have a high level of requirement. d & # 39; action. It means that we are also able to overcome the situations in which we really fail.
But who was wrong in this case?
If I still do not have the conclusions, I can not make that statement. The government's guidelines have always been clear and we must ensure that these guidelines are followed and that the Branch follows its guidelines. This particular problem can not erase all the work that is done, and which is also done well, by the tax administration.
If our incomes rise above the GDP growth rate, this also stems from our fight against fraud and tax evasion. We must always pay attention to the different dimensions of the problems. We can not give in to the fight against tax evasion and fraud, and we can never compromise on guarantees and taxpayer rights. Two principles must be applied in practice.
One commentator suggested that the Director General of Taxes would have made the post available as a result of the Valongo affair. Possible responsibilities at the hierarchy level can be determined following the outcome of the investigation?
It is not up to the government to comment on the commentators. It is important for people to understand that when the government works with the tax authorities, it trusts the public administration. We can not always think that we are solving all the problems of fulanisation of responsibilities. It is clear that it is always important to clarify the responsibilities, but to solve the problems and not to leave everything in the same. What is most important to me, and to the Director General, I am sure, is to ensure that taxpayer rights are respected in all circumstances. And also make sure that all the income that has to be paid is actually paid. When a taxpayer fails to pay, it weighs down those who do not.
And I take the opportunity to say this: It is obvious that we must all think that the use of the tax foreclosure process for non-tax debts. Much of the litigation that exists between taxpayers who think they are being abused by the TA involves non-tax debts. I am talking about debts, quotas, professional orders, all sorts of debts involved in the tax seizure process.
"I put this question on the table so that it is also clear that technical assistance does not often intervene in tax collection procedures to collect taxes, which is expensive." many times, and some people who have already had responsibilities or who have political responsibilities, say that it is the voracity of TA to collect tax revenue, when in fact much of the coercive collection relates to the recovery of non-tax debts. "
From your point of view, should the tax authorities not be responsible for the debts?
The often disproportionate fines reported to taxpayers are road fines and they enter the enforcement process of the tax authorities. In addition, according to the case-law of the Supreme Administrative Court, the representatives of the State Treasury are themselves obliged to represent private concessionaires in the courts in order to recover debts resulting from infringements of the Code de la road.
Should this change?
It is very important that people think about this too. Tax authorities are only required to make such tax seizures for the demonstrated effectiveness of tax collection. And we can not yield to this point as a society. We must demand that TA impose taxes on everyone in the same way. And we must also demand that TA guarantee the rights of taxpayers. This balance is very important.
Do you think this role of the tax administration should be reassessed?
I ask this question on the table so that it is also clear that AT does not often take steps as part of the tax collection procedure to collect taxes. And so it is very expensive that many times, and some people who have already had responsibilities or who have political responsibilities, say that it is the voracity of the TA to collect tax revenue, while a large part coercive collection is about non-tax debt collection.
But is not that what happened in Valongo?
I will not comment on a particular case until I have all the documentation. As a result of these questions, I also discussed with TA the question of whether it is in the control objectives that we have defined in our scorecard, and I think it was important to do this. separation, what is the tax debt and what is not. When the TA does not want to execute these debts, the entities that verify it ask why. I do not tolerate situations where there is a disproportion of means, I say that we must know how to frame the debate and conduct it with serenity. So I think it's important to get to the bottom of things and really understand what has happened and in what dimension.
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