The State Budget generally approved on the 30th of October does not bring great news for the Algarve. Although the Algarve region contributes, according to CCDR data, in close to 5% of the national Gross Domestic Product, the State Budget only foresees a public investment in the order of 0,2% of the total foreseen, which represents about a mere 4% of the that the region produces, despite the notorious and evident needs for public investment!
In fact, as this is not an exclusive situation in the Algarve, but extends to the entire interior, the resources generated throughout the national territory are directed almost exclusively to boost investment in Lisbon and Porto, contributing nothing to the reduction of asymmetries that are registered in the national panorama that, thus, will tend to increase.
See the example of the tariff reduction foreseen for social passes for public transport, applicable exclusively to the metropolitan areas of Lisbon and Porto.
With regard to health, nothing is foreseen regarding the pressing need to build a new central hospital that will give a real response, both in terms of training and in terms of qualification, despite being identified as a second national priority in a technical study of 2006, commissioned by the then government.
In relation to accessibilities, the deplorable and glaring state in which the EN125 is found did not suggest any funds for its redevelopment, despite the numerous advertisements for works that, in practical terms, meant little or nothing.
Although the alternative could be the abolition of tolls on Via do Infante, the executive chose to ignore the difficulties that the Algarve people face in their daily commute.
The reduced offer of housing sets an additional regional constraint, causing increases in the values practiced, already inflated by tourism and the great attractiveness for foreign residents.
This is a structuring obstacle, since the Algarve is also faced with a shortage of labor, and the solution may be the relocation of unemployed workers to other regions.
However, as this is a practically impossible scenario, as the region is unable to absorb more population due to the lack of available housing, the government lost yet another opportunity to define policies to encourage rental and mobility that would contain speculation and, at the same time, reduce unemployment at the national level.
As for leasing, it had already been chosen to face Local Accommodation as the reason for the problem, when it has contributed to the rehabilitation of buildings that were vacant, to job creation and to decentralized economic dynamization.
Although the phenomenon has been happening for several years in the Algarve, it was only after the first effects were felt in Lisbon and Porto that regulation was advanced.
And, although not all measures were negative, it was found that some of them are penalizing and dissuasive for entrepreneurship in this area.
The issue of lease should be analyzed in isolation, and the solution may be to exempt from IRS, for a period of 3 to 5 years, the rents received by owners who invest in the rehabilitation of properties for the purpose of long-term leases.
This measure would have much more practical effects than the expected 50% budget reduction in the IRS of returning emigrants.
Also in this matter, the government chose to reduce higher education fees, which, although positive, could jeopardize the already weakened financial situation of a good part of the universities and does not solve the most pressing problem of the lack of accommodation for displaced students, where Faro it is no exception, despite having created the possibility of deducting the amounts supported with the income from the IRS.
Another aspect ignored in this OE is related to the Tax on Petroleum Products (ISP) and its supposed fiscal neutrality. In fact, the tax had been changed in order to offset the reduction in VAT revenue due to the drop in the price of oil and, consequently, the price of fuel.
Thus, whenever the price of oil dropped, the price of fuel would remain unchanged, with consumers being responsible for guaranteeing the same revenue to the State.
When the price of oil increased, the ISP would decrease, so that consumers would not feel the effect of this increase in their wallets, while still maintaining the government's tax revenue.
Currently, we have been witnessing the increase in the price of oil without anything being done about the ISP, the effect of that increase falling exclusively on the Portuguese.
In other words, the State asked citizens to temporarily support the maintenance of revenue, promising that, when the situation was reversed, it would compensate them and, in an act of debatable good faith, it does not do so, despite more than 50% of the price of a liter of fuel represent taxes!
Furthermore, with regard to the Algarve and the interior regions, the proximity of the border causes a relocation of economic activities to Spain through this price differentiation in fuels.
In fact, the difference exceeds in certain cases €0,30/litre, which means that in a 60 liter tank, the difference is greater than €18.
If we consider this reality with that of propane gas, whose price in Spain corresponds to half of that practiced in Portugal, and even if the Spanish VAT on restaurants is 10%, while the Portuguese VAT varies between 13% and 23%, it is easy to understand the weekend program for most of the Algarve and traffic to neighboring Spanish cities, to the dismay of Portuguese entrepreneurs, merchants and shopkeepers.
It is enough to wonder if the Spanish State Budget will not produce more effects on the Algarve economy than the Portuguese one!
Why?
We can and should ask ourselves why the Algarve does not have enough weight for it to be given its due importance by the central power.
After all, it is one of the most productive regions and welcomes in the summer a population that triples its resident population.
In addition, it strongly contributes to the country's visibility and external notoriety, as it is one of the best known and most respected tourist destinations in Europe. Still, Lisbon and its rulers continue to disregard the Algarve.
It's because? Because, except for some outbursts and “civic initiative” evidenced daily on social networks, most understand that political issues are not of their interest, do not affect them, and do not give it due importance.
Added to this is a regional political power that has little weight at the national level, since it has not shown a real capacity for aggregation, often overlapping the political colors with regional interests.
Despite the existence of an Intermunicipal Community, the motivations of its representatives often follow principles of group dynamics that do not diverge from the central guidelines and policies, overlapping political and personal interests with those for whom they were elected.
Of course, we all recognize these facts, but it is important to remember that, in the last legislative elections, 48,62% of the people in the Algarve did not vote, which is perhaps the best explanation for the current course of events.
Who is Raul Luz?
Born in Faro in 1980, where he currently resides, Raul Afonso Luz lived up to the age of 24 in São Brás de Alportel, where he spent his entire school career.
In 1998, he entered the Faculty of Economics of the University of Algarve, having completed his Degree in Economics in 2002.
He immediately started his professional career at one of the largest national IPSS, the António Silva Leal Foundation, having performed the functions of Accounting Technician (2002-2004), Customer Manager (2004-2009) and Human Resources Director (2009-2015 ), assuming since 2014 the position of Financial Director of the Institution.
He has been an Independent Consultant and Certified Accountant for several companies in different business areas, since 2007.
Note: article published under the protocol between the Sul Informação and the Algarve Delegation of the Order of Economists
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