«I had dinner last night with the CEO of a profitable, Portuguese, multinational firm. Profitable, Portuguese, and multinational all sounded great until he told me he is relocating the company to Another Country.
Why?
Simple. Our net taxes to That Country will be 5%.
Five percent! Here in Portugal your firm pays about 35% at the end of the day, right?
About that.
Well, that’s amazing. Even I – not a person known for business acumen – can see the advantages there.
Well John, a chimpanzee can see the advantages there.
We moved on to dessert.
But wait a minute… if the tax advantages between Portugal and That Country are so dramatically apparent, and real… why will any Portuguese firm remain here in Portugal after they figure this out – and, why will any foreign firm come to Portugal and locate here in the future?
That’s two questions, John. The answer to the first is “they will not,” and to the second, “they will not.”
But that’s a really dismal outlook. It means that before long, the only tax base left in Portugal will be private citizens – me and you, for example.
Sorry, John – it means you. I’m leaving with the firm and taking my family with me.
Sadly, this is not an imaginary conversation – and it ruined my dessert. I even continued my questioning, in staggering disbelief – or denial – asking him if driving profitable, tax-paying enterprises to foreign shores was a policy of the current government only, and he replied “no,” that the Portuguese Ship of State has been on this suicidal course for some time, and that it is not unique to any one government or party.
It occurs to me that the actual suicidal act does, in the end, lead to death. It does not lead to sustainable tax revenues, or to well being – not for any party – not for anybody. It just leads to death. In Portugal’s case, a slow death. Even worse.
I have lost my appetite entirely. Can anyone help me to restore it? If not my appetite… then at least some hope for the future? Our children’s future?»
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