Future Net Taxes in Portugal: A Generational Account Perspective

This study uses generational accounting, a new method of long term fiscal planning, to study Portugal's fiscal policy. Specifically, it computes a set of generational accounts (GAs) for Portugal and uses them to reach an important conclusion: Portuguese fiscal policy is unsustainable. Under current fiscal rules, future Portuguese generations face a net tax (taxes paid net of transfer payments received) burden, relative to income, that is well in excess of that faced by current generations. Significant increases in taxes or reduction in expenditures are required to satisfy the government's long term (intertemporal) budget constraint and avoid unfairly burdening future generations.N/