REFORMA DO ESTADO VII - STATU REFORMATIONI VII - STATE REFORM VII

This is OECD point of view about the reform of the Portuguese State: http://www.oecd.org/portugal/Portugal%20-%20Reforming%20the%20State%20to%20Promote%20Growth.pdf


«Rationalising VAT by further reducing the scope of exemptions and 
reduced rates»
«Portugal used to make extensive use of reduced VAT rates, and the resulting revenue losses
due to policy and imperfect compliance and administration were substantial. Although the
objective of reduced rates is to alleviate the tax burden on low-income households and
support weaker economic sectors, the targeting of such reductions is often poor, and a
large share of the benefits accrues to better-off families. Likewise, applying reduced rates
to some sectors, such as the hospitality industry, is a poor way of supporting low-skill
employment opportunities.
As part of the Memorandum of Understanding (MoU) with the Troika and in line with EU
and OECD recommendations, Portugal has significantly revised the scope of VAT rates,
triggering a wider use of the normal VAT rate from January 2012. The use of VAT
exemptions has also been reduced (e.g. VAT exemption applied to agricultural products was
revoked), in order to achieve greater efficiency. The authorities are advised to build on
recent progress and continue to extend the scope of application of the standard VAT rate.
Social objectives can be met more effectively through the social safety net than by means
of reduced VAT rates.»

This is in page 41 of the OECD report! INCREDIBLE by two ways:
- How is possible that a International Organization have this kind of incompetence or «motivation» in an advise that would prejudice a member like Portugal by an increase to 23% of VAT rate over «hospitality industry» services? HAVE SHAME IN THAT ADVISE! Do you know very well that Spain and France have lower VAT taxes in that services!
- How is possible that you advise an increase of food goods to 23% of VAT rate with an additional pressure to lower and middle classes of income?!!! HAVE SHAME TOO!!!!!

We don´t see a deep analysis about how could Portugal decrease public expenses that don´create value directly or indirectly. This kind of International Organizations have a culture of irresponsiblity and incompetence that we must stop!

In the page 6 of the OECD report we have:


«MAIN FINDINGS AND RECOMMENDATIONS»
 Deep structural reforms are critical to successfully rebalancing the economy, restoring
sustained growth andmaintaining social cohesion.
 The gains from structural reforms are potentially large:
- Already approved pro-competitive reforms in product market regulation, including in
network industries, combined with implemented labour market reforms to reduce
employment protection for regular contracts could boost productivity and potential
GDP by around 3 ½ per cent by 2020.
- Labour market reforms to reduce employment protection for regular contracts will
also promote social cohesion by reducing labour market segmentation.
- Gains to be reaped from further reforms are nonetheless still substantial.
 New sources of growth could be generated by more efficient investment in
infrastructure and innovation, which could help Portugal take better advantage of global
value chains.
 Despite the progress made, human capital remains the Achilles' heel of the Portuguese
economy. Upgrading human capital will require further reforms of education and
occupational training systems, as well as of the functioning of the labour market.
 Wage-setting mechanisms have been an obstacle to regaining competitiveness and have
likely contributed to job losses for the low-skilled. Abolishing administrative extension of
collective agreements beyond cases in which companies account for less than 50% of
employment in a given sector is essential to promote firm-level bargaining and restore
competitiveness.
 Further improvements in the tax code, to shift the burden of taxes away from labour in a
revenue-neutral manner, by further broadening the tax base and increasing
environmental taxes, would also enhance competitiveness and contribute to fairer
income distribution.
 The efficiency of social spending needs to be increased so that poverty prevention
schemes can continue to be sheltered from fiscal adjustment, and in order to address
the medium-term pressures associated with population ageing.
 The State has a key role to play in the design, implementation and monitoring of
reforms, as well through its role as provider of social, education and judicial services.
 Public human resource management reforms are needed to support the structural
reform agenda and lay the groundwork for strides towards a more efficient and effective
State.
 Effective reform of the State requires attention to a range of interdependent issues
aimed at strengthening public administration capacities, resilience and leadership for
the reform tasks ahead. The Centre of Government has a critical role to play in
orchestrating reforms.
 The reform of the State needs to include a strengthening of the institutional and process
framework forsustainable fiscal management.»