Pereira and Rodrigues discuss tax reform in Portugal on the basis of a dynamic general equilibrium model where the tax system influences long-term growth through its effects on the demand for capital and labor. The model is simulated by implementing the tax reform package proposed in 1999 by a...

In 1999, Cavaco Silva, the Portuguese Prime Minister from 1985 to 1995, proposed a comprehensive tax reform package, which is to this day the basic reference in the tax policy debate in Portugal. A tax shock would consist of 4pp cuts in the corporate income tax and in the firms social security...