Tax burden increased in 2024

The tax burden rose again in 2024, after having decreased in the previous year. The Public Finance Council (CFP) revealed this Tuesday that the increase in the weight of indirect taxes and social contributions more than offset the reduction in direct taxes.

According to the report “Budgetary Evolution of Public Administrations in 2024”, by the CFP, the tax burden of Public Administrations, measured by revenue from taxes and effective social contributions, increased by 0.1% of the Gross Domestic Product (GDP) in 2024, standing at 35.6% of GDP.

Thus, last year, the Portuguese State collected a greater proportion of the wealth produced in the country through taxes and social contributions. More than a third of all wealth generated by the economy was allocated to financing public expenditure, in a slight increase in the fiscal effort on the part of citizens and companies.

According to the report, cited by the Lusa news agency, “this increase resulted from the increase in the weight of indirect taxes and effective social contributions, which more than offset the reduction in direct taxes”.

According to the CFP, the indicators that measure the weight of taxation on the respective bases increased: effective social contributions corresponded to 22.1% of remuneration, IRC rose to 18.6% of the gross surplus of business operations and VAT and IEC (Special Consumption Taxes) increased to 18.2% of nominal private consumption.

These indicators reached “historical highs of the last two decades”.

In the opposite direction, the IRS on specific income from work reduced its weight in remuneration to 8.8%.

According to the organization led by Nazaré da Costa Cabral, globally, public revenue grew 6.3% in 2024, exceeding the value forecast in the State Budget (OE) for that year, “driven by the robustness of tax and contributory revenue”.

Public spending accelerated in 2024 for the third consecutive year, increasing by 7.6%, partly due to greater implementation of the RRP. Despite the growth, it was below that forecast in the 2024 State Budget.