The vast majority of Portuguese municipalities recorded a decrease in income inequality among citizens from 2020 to 2021, including some cases where the inequality is more pronounced.
Based on information shared by the Tax and Customs Service (AT), the National Statistical Institute (INE) calculates, each year, how the tax authorities’ declared income is distributed nationally. The data for 2021, released this Tuesday, shows that nearly three out of four municipalities have reduced the asymmetry, by applying a Gini coefficient (an index that measures the income distribution among citizens on a scale of 0 to 100) to the total taxpayer-deducted declared income paid by the taxpayer.
At the national level, the coefficient was 36.1% compared to 36.4% in the previous year. How do you read these numbers? Gini coefficient INE explains in his file locationis an index of inequality in the income distribution that aims to sum up one value of the asymmetry of that distribution, thus, on this scale from zero to 100, zero means that “all individuals have the same income and 100 that all income is concentrated in one individual.”
The “slight decrease in income inequality”, of 0.3 percentage points compared to 2020, was driven by the fact that in 223 municipalities there was a decrease in inequality.
“In 19 out of 28 municipalities with Gini coefficients higher than the national value,” the National Statistical Institute wrote, “there was also a “reduction in income asymmetry” in 2021. “On the contrary, there was an increase in income inequality in 48 municipalities, mostly in the Centre, North, Alentejo and Algarve (five out of 15 with available information) and the autonomous region of Madeira (seven out of 10 with available information). In 2021, Campo Maior (2 percentage points more) was the municipality with the highest increase in the Gini coefficient.
Looking at the various municipalities, there are 30 municipalities where the disparity was higher than the national average. Lisbon appears at the top of these disparities (42.5%), followed by Porto (42%), Azorean municipality Vila do Porto (40.7%) and Cascais (40.6%). That municipality on the Azorean island of Santa María was the municipality with the biggest drop, at 1.7 percentage points.
At the national level, the average value of declared gross income deducted from the IRS paid was €10,128, with 69 municipalities having “higher” values. In this range appear “the eighteen municipalities of the Lisbon Metropolitan Area (AML), with emphasis on Oeiras (€14,552, the highest value in the country), Lisbon (€13,378) and Cascais (€12,296).
“In addition to the AML municipalities, 22 municipalities in the center, 13 in the Alentejo, seven in the north, five in the autonomous community of the Azores, three in the autonomous community of Madeira and Faro in the Algarve, have exceeded the value of the country. In the case of the Porto Metropolitan Region, four neighboring municipalities stand out, due to the high average values observed – Porto (€11,568), Maya (€11,290), Matosinhos (€10,927) and in La Nova de Gaia (10,214 euros), ”writes the National Institute of Statistics.
More than 12 thousand euros, according to the National Institute of Statistics, show “Oeiras (14,552 euros), Lisbon (13,378 euros), Cascais (12,296 euros), Alcochete (12,239 euros) and Coimbra (12,055 euros)”.
By sub-region, the highest incomes, in amounts “above the national reference”, are concentrated in the Lisbon metropolitan area (€11,708), in the Leiria area (€10,367), in the Coimbra area (€10,351), in the Aveiro area (€10,307) and in Central Alentejo (€10,243).
With values of less than €9,000 per taxable person, “a group of municipalities appears, especially in the Nordic region”. With the lowest amounts come the regions of Alto Tamiga (€8,202), Tamiga and Sousse (€8,568) and Douro (€8,943).
The NIS explains that this data is based on three indicators: AT’s “Declared Gross Income,” “IRS” (final tax paid annually to state) and a variable called “Reported Gross Income Deducted from the IRS.” There are data that the family and the taxable person see. In order to prepare this data, the NIS received anonymized data on IRS settlement notes.
INS states that gross declared income corresponds to the amount “before any specific deductions are made” of income from dependent work, pensions or, in the case of other categories, net income of “specific deductions”; The estimated interest corresponds to the tax paid (that is, “the net collection of IRS-stated deductions and tax benefits, before deductions for withholding tax and payments on account are made”).
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