If immigration ended, each taxpayer would have to pay another 1,700 euros per year

Ending immigration would make tax load fired from 35.2% to 43.1% of GDP. Scenario designed for the Portuguese taxpayer is among the most serious in the eurozone. See how immigrants relieve demographic and fiscal pressure.

The absence of immigration would have profound consequences in the sustainability of public accounts in Portugal. Close to 100% the country’s gates to immigrants would require a large increase in tax burden, which would go from the current 35.2% to 43.1% of GDPaccording to the conclusions of a recent researchers from Nova SBE and the University of Stockholm.

In practice, each Portuguese taxpayer would have to support the current tax burden, and about 1,700 additional euros per year.

These are “the costs of building walls” – the study title, which especially highlights the weight of the demographic agingone of the biggest challenges that European economies face. A problem that is not new: it has decades.

Europe has long been experiencing a trend of decline of the active population, motivated by low birth and increasing average life expectancy. This demographic evolution translates into fewer contributors to finance the system and in the most public expense associated with pensions and health care.

In Portugal, the scenario is no different. The study estimates that, even maintaining the current immigration flow (about 0.5% per year), a Budget adjustment of 2.9 points percentages from GDP until 2100 to ensure the sustainability of public accounts. But if immigration were reduced to zero, this effort would rise to 10.8 percentage points of GDP – 7.9 more points than in the base scenario, he quotes. In concrete terms, this would translate into a tax burden close to 43.1% of GDP, which would put Portugal among the countries with the highest tax pressure from the eurozone.

How immigrants relieve the pressure

According to investigators, immigrants play a determining role in relieving demographic and budgetary pressure.

The main reason is the Eutitan profile: Immigrants are, on average, younger than the resident population. Contribute to tax revenue through taxes and social discounts, while They resort less for pensions and health care.

The calculations show that in the eurozone, the immigrant population contributes a positive balance equivalent to 0.57% of potential GDP, while the native population has a negative balance of -0.62%. Although the natives contribute more by person, the aggregate effect is unfavorable due to aging.

Based on projections by the end of the century, researchers estimate that, maintaining the current pace of entries, the non -native population in the eurozone could reach 25% by 2025 and 50% in 2100. This means that, in the medium and long term, Demographic and economic sustainability will depend strongly on immigration and its descendants.

If immigration were eliminated, dependence ratios-that is, the relationship between active and inactive population-would get worse, further pressing public accounts.

Although the problem is transverse to the eurozone, the data reveal that Portugal is the country where the effect of immigration on public accounts is more significant. In the European average, the budgetary cost of aging is 14 percentage points of GDP, which can reach 16.3 points without immigration. The difference is only 2.3 points, while in Portugal this impact asces 7.9 points.

In practice, this means that, in a scenario without immigration, A 30 -year -old Portuguese taxpayer would have to pay another 1,700 euros a year in taxes. In the eurozone average, this value would surround the 845 euros.