Market warns of consequences of direct and indirect tax hikes

The government will likely have to brace for a drop in transactions, in declared incomes and therefore in public revenues as a result of increases in indirect taxation and in salary and pension deductions for taxes and social security contributions.

There are plenty of warning signs already suggesting that 2017 will be tough on revenues, particularly a spike in full-time contracts being turned into part-time agreements due to the rise of labor costs as a result of tax and contribution hikes. Notably, although taxes on salaried workers rose in 2016 compared to 2015, there was a much smaller increase in revenues from tax deductions. At the same time, we are seeing a growing number of self-employed professionals closing their books so that they will not have to pay increased social security contributions after these were linked to income, as has already happened with the...