C 312/212
EN
Official Journal of the European Union
1.9.2023
(27)
The 2023 Stability Programme outlines a medium-term fiscal path until 2027.
According to the 2023 Stability Programme, the general government deficit is expected to gradually decline to 0,1 % of GDP in 2025, to achieve a balanced budgetary position in 2026 and later to reach a small surplus of 0,1 % of GDP in 2027.
Therefore, the general government deficit is planned to remain below 3 % of GDP over the Programme horizon.
According to the 2023 Stability Programme, the general government debt-to-GDP ratio is expected to decrease from 103,0 % at the end of 2024 to 92,0 % by the end of 2027.
A more growth-friendly composition of public finances, on both the revenue and expenditure sides of the public budget, would strengthen Portugal's long-term fiscal sustainability while improving the business environment and contributing to sustainable and inclusive growth.
Tax benefits are widely used in the Portuguese tax system, with more than 500 tax benefits spread over more than 60 legal texts.
This increases complexity and diminishes the system's transparency, while at the same time resulting in forgone revenue.
The cost efficiency of existing tax benefits would benefit from being systematically monitored and assessed, allowing for significant improvements in this area.
Furthermore, State and municipal surcharges complicate the corporate income tax system, which creates an additional burden for both the tax administration and businesses.
The efficiency of Portugal's revenue administration could be strengthened to encourage voluntary compliance, while helping reduce tax evasion and fraud.
The administrative cost of tax collection is high and has further increased in recent years (by approximately 5 % from 2018 to 2020).
At the same time, the time taken to pay taxes in Portugal appears to be longer than in other Member States.
The already high outstanding tax arrears continued to increase (they stood at 45,9 % of total revenue by the end of 2020, well above the Union average).
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The capacity of benefits under Portugal's social protection system to reduce poverty is low and decreased further in 2021, while the evolution of the share of people at risk of poverty was among the worst in the Union (increasing by 2,4 percentage points), against a backdrop of general stability in most Member States.
The adequacy of the minimum income remains low and is well below the poverty threshold.
Such figures challenge Portugal's capacity to attain the poverty reduction goals set out in the European Pillar of Social Rights Action Plan.
At the same time, the social protection system remains complex, as various types of social benefits appear to serve similar objectives.
The ensuing complexity and fragmentation results in relatively low take-up rates and a lack of effective focus on people who are most in need, hampering the coverage and ultimately the adequacy of social benefits.
The simplification of existing benefits together with a timely imple­ mentation of the national strategy to combat poverty will increase Portugal's capacity to face future social challenges.
(29)
In accordance with Article 19(3), point (b), of Regulation (EU) 2021/241 and criterion 2.2 of Annex V to that Regulation, the recovery and resilience plan includes an extensive set of mutually reinforcing reforms and investments to be implemented by 2026.
The implementation of Portugal's recovery and resilience plan is underway, albeit with risk of some delays.
Portugal submitted two payment requests, corresponding to 58 milestones and targets in the recovery and resilience plan and resulting in an overall disbursement of EUR 2,98 billion.
The Portuguese recovery and resilience plan is ambitious and complex in nature.
Strong governance and continuous monitoring of the plan are essential to minimise the risk of delays.
The inclusion of the new REPowerEU chapter in the recovery and resilience plan will allow additional reforms and investments to be financed in support of Portugal's strategic objectives in the field of energy and the green transition.
The systematic and effective involvement of local and regional authorities, social partners and other relevant stake­ holders remains important for the successful implementation of the recovery and resilience plan, as well as other economic and employment policies going beyond that plan, in order to ensure broad ownership of the overall policy agenda.
On 26 May 2023, Portugal submitted an amendment of its plan, revised with new measures, including a REPowerEU chapter, and taking into account the increased maximum financial contribution (17).
In accordance with Article 14(6) of Regulation (EU) 2021/241, Portugal also submitted its request for additional loan support under the Facility.
(17) The maximum financial contribution for Portugal was updated on 30 June 2022 to an amount of EUR 15,5 billion in grants, in line with Article 11(2) of Regulation (EU) 2021/241.