Tax expenditures and redistribution - The case of Portugal

Michael Christl and Silvia Navarro Berdeal ()
Additional contact information
Silvia Navarro Berdeal: European Commission - JRC, https://joint-research-centre.ec.europa.eu/index_en

No 2026-05, JRC Working Papers on Taxation & Structural Reforms from Joint Research Centre

Abstract: This paper assesses the fiscal and distributional effects of personal income tax expenditures in Portugal using EUROMOD microsimulation and 2022 EU-SILC microdata. We compare the 2023 tax-benefit system with a counterfactual scenario in which each tax expenditure category is removed individually to estimate first-round fiscal, distributional and cost-efficiency impacts. We find that tax expenditures account for almost 40% of personal income tax revenues and predominantly benefit middle-income households, with substantial variation in redistributive effectiveness across instruments. Work-related and pension-related tax expenditures are regressive, increasing inequality relative to the baseline, while family, health, housing and education-related provisions are broadly neutral. The Net income guarantee (‘Mínimo de Existência’) tax allowance, stands out as the only progressive instrument and is the most cost-efficient tax expenditure on both inequality and poverty dimensions. These findings suggest that reallocating fiscal resources from broad-based, regressive provisions towards targeted instruments such as the ‘Mínimo de Existência’ could yield greater redistributive returns.

Date: 2026-05
References: Add references at CitEc
Citations:

Downloads: (external link)
https://publications.jrc.ec.europa.eu/repository/handle/JRC146412 (application/pdf)

Related works:
Working Paper: Tax expenditures and redistribution - The case of Portugal (2026)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ipt:taxref:202605

Access Statistics for this paper

More papers in JRC Working Papers on Taxation & Structural Reforms from Joint Research Centre Contact information at EDIRC.
Bibliographic data for series maintained by Publication Officer ().