Warren
Buffett and secretary: a global lesson on tax fairness?
Jornal De
Negotios, Portugal
Talking Taxes: Warren
Buffett, His Secretary, and the Grocer
"In an environment of austerity, it is a problem that concerns most Western societies: the lack of equity. … In the United States, where the debate about tax fairness is red hot, tax inequality is in the public square. Last week, Mitt
Romney was obliged to disclose his tax returns, which showed that his effective
tax rate was 13.9 percent - on an income of $42 million. What would we discover
if we found out how much in taxes larger fortunes in Portugal pay?"
Tax inspectors were
perplexed. The restaurant consumed quantities of bottled mineral water far in
excess of the number of meals sold. When questioned, the restaurant owner
replied: “we use bottled water to wash the dishes.”
The story sounds like a joke,
but it really happened and is told by former finance minister and former
governor of the Bank of Portugal, José da Silva Lopes. The case, which he
encountered over two decades ago, led to a working group on additional tax
reform.
More than twenty years have passed
since the time of the mineral water story, yet the problem remains exactly as it was. The state continues to be fiscally unable to rein in small and middle-sized
businesses. Quite the contrary. One question that seemed to have disappeared
from Portuguese society - "Would you like a receipt?" has recently returned
to restaurants and even, amazing as it seems, gas stations, where receipts were
once given only to those who were thoroughly interrogated.
During recent decades, a lot
has been said about tax evasion in Portugal - and a thousand and one decisions
have already been announced. And the one thing that can be guaranteed about recent
decisions made on the issue is that none are truly effective.
Staring in April, all merchants
with revenue above €125,000 in 2011 [$163,687] must have a special machine that enables
them to participate in the program for tax inspection and revenue oversight. Next
year, the amount will be €100,000.
Of course, in the midst of a
very serious recession, with many small businesses shuttering their doors - just
walk the streets - this is not the most opportune time to announce that the
state is forcing you to buy a machine. The lack of
opportunity in Digital Terrestrial Television was bad enough. In any
case, this being the cause of fighting tax evasion, it is impossible to
disagree.
[Editor's Note: The author refers to the nation's switchover from analogue to digital TV broadcasting. Under new European Union rules, to recieve a television signal, people in Portugal were obliged to purchase a decoder box. As the author points out, forcing people to buy new equipment in the midst of one of the toughest economies in decades has been a lot to ask. This is a video of a legislator complaining about the measure on the floor of Portugal's lower House. It is in Portuguese.]
The question that small enterprises
raise about this tax control initiative is always the same: what about the
others? Why have tax administrators limited the tax planning that larger enterprises
have to deal with? In an environment of austerity, it is a problem that concerns most Western societies: the lack of equity.
In the United States, where
the debate about tax fairness is red hot, tax inequality is in the public square.
Even before this major crisis hit in 2007, it was reported that Warren Buffett
pays lower taxes than his secretary, whom Barack Obama has transformed into a
symbol of fiscal inequality. Last week, the most serious Republican
presidential candidate, Mitt Romney, was obliged to disclose his tax returns,
which showed that his effective tax rate was 13.9 percent in 2010 - on an
income of $42 million.
What would we discover if we found
out how much in taxes larger fortunes in Portugal pay?
Of course the battle against
tax evasion must be a cause of the whole of society. Each of us must be aware
that for every person who fails to pay their taxes, there is someone else who has
to pay double. But for that, one would need to know that the tax authorities
treat everyone the same and have effective weapons at their disposal.
Posted by WORLDMEETS.US
Whether it's the grocery
store, the restaurant or the cafe, everyone has to pay taxes. All of us must assume
the responsibilities of tax inspectors and Treasury officers - since they have not
- as an effective way of exposing tax evasion. Everyone must be aware of their
fiscal responsibilities - and it shouldn't always be the weakest among us who suffer.
Tax justice also leads to more tax revenue.
