Tax expenditures and redistribution - The case of Portugal

Michael Christl and Silvia Navarro Berdeal

No 1705, GLO Discussion Paper Series from Global Labor Organization (GLO)

Abstract: This paper assesses the fiscal and distributional effects of personal income tax expenditures in Portugal using EUROMOD and 2022 EU-SILC microdata. We compare the 2023 tax-benefit system with a counterfactual scenario in which tax expenditures are removed to estimate first-round impacts. We find that tax expenditures account for almost 40% of personal income tax revenues and predominantly benefit middle- and higher-income households, with large variation in redistributive effectiveness across instruments. While the Net Minimum Income Guarantee is progressive and cost-efficient in reducing inequality, most work- and pensionrelated allowances deliver limited equity gains, suggesting scope for reform.

Keywords: Tax expenditures; EUROMOD; Income redistribution; Microsimulation; Fiscal policy; Cost-efficiency (search for similar items in EconPapers)
JEL-codes: H22 H24 I38 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:1705

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