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Implicit Taxes and Credit Ceilings: The Treasury and the Banks in Portugal
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Resumo(s)
Sustaining government budget deficits in high public debt countries requires increasingly diverse forms of tax anesthesia which must be recognized and accounted for in policy analysis. In economies with exchange controls, there may be an interest rate tax, implicit in low real interest rates, credit ceilings or other administered controls imposed by the Treasury on the Banks. Such implicit taxes end up being paid by lenders or borrowers who cannot avoid them by moving abroad (section 1). All domestic banks were nationalized in Portugal in the wake of the 1974 Revolution. The hybrid nature of the Portuguese commercial banks suggests that one may not take the consolidation of the financial public sector to include them (section 2). A decomposition of the debt to income ratio in Portugal from 1976 to 1987 according to both criteria shows substantially different tax bases for domestic seignorage (section 3). The incidence of the anesthetized tax is on private borrowers or lenders. They suffer from spreads well in excess of any reasonable intermediation margin. Estimated revenue from the implicit intermediation tax is substantially larger than from domestic seignorage (section 4). The ongoing tax reform cannot be seen as complete until implicit taxes are accounted for.
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Citação
Beleza, Luis M. and Braga de Macedo, Jorge, Implicit Taxes and Credit Ceilings: The Treasury and the Banks in Portugal (December, 1988). FEUNL Working Paper Series No. 106