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Amid growing unrest, Portugal’s Finance Minister Vitor Gaspar unveiled details recently of a new wave of austerity measures, aimed at reducing the country’s deficit and appeasing its bail-out creditors.
Determined to ensure disbursement of the next tranche of international aid from Portugal’s bail-out agreement, Gaspar previewed the 2013 budget providing for fiscal measures totalling around EUR4.3bn (USD5.6bn).
Among the key measures to be included in the budget are plans to introduce a 4% extraordinary tax on income next year and to reduce from eight to five the number of income tax brackets.
Other proposed tax rises announced by the finance minister include plans to impose new levies on capital gains and to introduce a financial transactions tax. Precise details of these proposed measures have yet to be finalized.
The centre-right Portuguese government of Prime Minister Pedro Passos Coelho has, however, been forced to abandon its controversial plans to increase social security contributions paid by workers.
The government had planned to increase payroll social security contributions by almost two thirds, from 11% to 18%, and to reduce employer contributions from 25% currently to 18%.
Unsurprisingly, the proposals provoked immediate outrage from unions and from workers, accusing the government of simply transferring the fiscal burden from companies to individuals.
The u-turn marked a significant turning point, highlighting Portugal’s waning patience and increasing frustration with the austerity measures imposed by international lenders in return for the country’s EUR78bn bailout programme, agreed with the Troika last year.
Portugal has already pursued a rigorous fiscal policy, raising taxes, cutting wages and public spending.
The government aims to reduce the deficit from a forecast 5% of gross domestic product (GDP) this year to 4.5% in 2013, and to subsequently 2.5% of GDP in 2014, under the 3% limit.
Due to be examined by the Portuguese parliament on October 15, the budgetary measures have already gained approval from the European Commission.
Amid growing unrest, Portugal’s Finance Minister Vitor Gaspar unveiled details recently of a new wave of austerity measures, aimed at reducing the country’s deficit and appeasing its bail-out creditors.
Determined to ensure disbursement of the next tranche of international aid from Portugal’s bail-out agreement, Gaspar previewed the 2013 budget providing for fiscal measures totalling around EUR4.3bn (USD5.6bn).
Among the key measures to be included in the budget are plans to introduce a 4% extraordinary tax on income next year and to reduce from eight to five the number of income tax brackets.
Other proposed tax rises announced by the finance minister include plans to impose new levies on capital gains and to introduce a financial transactions tax. Precise details of these proposed measures have yet to be finalized.
The centre-right Portuguese government of Prime Minister Pedro Passos Coelho has, however, been forced to abandon its controversial plans to increase social security contributions paid by workers.
The government had planned to increase payroll social security contributions by almost two thirds, from 11% to 18%, and to reduce employer contributions from 25% currently to 18%.
Unsurprisingly, the proposals provoked immediate outrage from unions and from workers, accusing the government of simply transferring the fiscal burden from companies to individuals.
The u-turn marked a significant turning point, highlighting Portugal’s waning patience and increasing frustration with the austerity measures imposed by international lenders in return for the country’s EUR78bn bailout programme, agreed with the Troika last year.
Portugal has already pursued a rigorous fiscal policy, raising taxes, cutting wages and public spending.
The government aims to reduce the deficit from a forecast 5% of gross domestic product (GDP) this year to 4.5% in 2013, and to subsequently 2.5% of GDP in 2014, under the 3% limit.
Due to be examined by the Portuguese parliament on October 15, the budgetary measures have already gained approval from the European Commission.
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