findings are based on unrealistic assumptions and some are even false. for instance: "We find that reducing the TSU rate by 4.0 p.p. requires a 2.0 p.p. increase in the IVA rate on private consumption", this is not correct. a report, carried out by the Ministerio das Finanças, shows that reducing the TSU rate by 3.7 p.p. requires a 2.19 p.p. increase in the IVA, thus a 4.0 p.p. rate reduction requires a 2.37 increase in the IVA. this means 18,5% more than is written.
on the other hand the authors ignore the impact of current economical environment and its foreseeable evolution on effects.
however the most eccentric conclusion is: "On the consumer side, despite the higher IVA, private consumption remains stable." is this a joke?
so, the authors want us to believe that increasing IVA in 2.0 p.p., in a high depressed market, will not reduce the consumption.
who am I to contradict such faith?
nota: escrevi em inglês porque o documento citado tem o objectivo de fomentar o debate político deste tema (desvalorização fiscal via redução da TSU). apesar dos autores serem portugueses foi escrito e divulgado em inglês.
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