PORTUGAL ADOPTED sweeping tax hikes yesterday to meet budget goals under its international bailout, prompting unions to call a general strike against austerity measures that have exacerbated recession and are set to push record unemployment higher.
In a sign of progress in its long haul back to financial stability, Portugal earlier in the day returned to the bond markets for the first time since it sought its €78 billion bailout last year, swapping short for longer-dated debt to buy time to fix its finances.
The country’s worst recession since the 1970s could deepen if the tax hikes further undermine consumer confidence and fail to stop a fall in tax revenue.
“We are confronting a critical moment,” finance minister Vitor Gaspar told journalists as he detailed the tax rises, which the government came up with after it abandoned a previous tax plan in the face of mass protests.
“It is fundamental that we maintain our current path to overcome our difficulties,” he said.
The country’s main union, the CGTP, responded with a call for a general strike on November 14th, dubbing the austerity measures a “programme of aggression against the workers and the people”.
Gaspar outlined tax rises across the board for 2013, including income and property taxes, plus a new tax on financial transactions. The average income tax rate will rise to 11.8 per cent from 9.8 per cent, and an additional 4 per cent surcharge will be levied on incomes in 2013.
The government said the measures, which include spending cuts, will amount to 3 per cent of gross domestic product next year. It raised its estimate for unemployment to 16.4 per cent from the current record level of 15 per cent. - (Reuters)
