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DREM releases income statistics for the 2018 period based on the Personal Income Tax (IRS) return

The Regional Directorate of Statistics of Madeira (DREM) proceeds with the dissemination, which began last year, of a set of regional information based on anonymised fiscal data from the Portuguese Tax and Customs Authority (AT). These data is related with the settlement note of Personal Income Tax (IRS - Modelo 3), obtained under an agreement between Statistics Portugal (INE) and AT. The information refers to the 2018 and is broken down by municipality.

In this study, several indicators related to the gross reported income (per se or excluding the tax paid) are released, by tax household or taxable person and also some variables that allow to assess income inequality (S80/S20 ratio and Gini coefficient).

Median value of gross reported income minus income tax paid by taxable person in the Region and in the country is similar

In 2018, 114,651 tax households and 159,177 taxable persons were recorded in the Region. Both variables grew by 2.2% and 1.7%, respectively, compared to 2017.

In the same year, the gross reported income minus income tax paid amounted to 1,772 million euros (+5.8% than in 2017).

In 2018, the average gross reported income minus income tax paid by taxable person was € 11,135 (+4.1% than in 2017), while the median was € 9,055 (+4.4%). At the national level the average was € 11,419 (+4.2%), while the median (€ 9,067, +4.4%), was only 12 euros higher than the regional average.

In the context of the 7 NUTS2  regions, the Autonomous Region of Madeira (ARM) is only behind A.M. Lisboa, the region with the highest median (€ 10,750),which stands significantly above the other regions, while Norte has the lowest median (€ 8,456). The medians of ARM (2nd region, with € 9,055) and Algarve (6th region, with € 8,863) are relatively close.

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Main indicators of income inequality in the Region are similar to the country’s

The S80/S20 ratio, which corresponds to the ratio between the total income of the 20% with the highest income and the income earned by the 20% with the lowest income, stood at 3.1, in 2018, meaning the income of the richest 20% is 3.1 times higher than that of the poorest 20%. The national average is 2.9, and by region, A.R. Azores has the highest ratio (3.2), followed by A.M. ​​Lisboa and the ARM (3.1). The region with the lowest inequality according to this indicator is Alentejo (2.6).

The Gini coefficient is also an indicator of inequality in income distribution, which aims to summarize the asymmetry of this distribution in a single value. It varies ​​between 0% (when all taxable persons have the same income) and 100% (when all income is concentrated in a single taxable person).

In 2018, the regional Gini coefficient of gross reported income minus income tax paid by taxable person was 26.3%, down by 0.4 percentage points. The ARM’s value stands slightly below the country’s (26,5%). By region, Alentejo (23.7%) and Centro (24.5%) had the lowest Gini coefficients, while AR Azores (27.9%) and A.M. Lisboa (27.7%) showed the highest values. The ARM was the 3rd region with the highest Gini coefficient.

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