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Further austerity measures and higher tax rates for Portugal

Published on Oct. 17, 2012

Further austerity measures and higher tax rates for Portugal

The Portuguese Government presented in the Parliament the State Budget for 2013 on Monday. In the words of Vítor Gaspar, Minister of Finance, the Budget, the most austere budget ever in Portugal, includes a “sharp tax rate increase.”

The Judges Association announced that in case the document passed as it is -the Government has absolute majority- they will ask for "an inspection on its constitutionality", since they consider “the Budget violates tax system's principles, such as the ability to pay, envisages by the Constitution.”

The Council of Ministers drew up the State Budget after a 20-hours meeting. The Government expects to accomplish its deficit reduction commitment, cutting GDP to 4.5%.

First, the number of stages for the Personal Income Tax has been reduced, so the paying is now higher. In particular, the tax will fluctuate between 14.5% for workers gaining up to 7,000 euros and 48% for gross annual earning exceeding 80,000 euros.

The Government will also create an additional extraordinary tax, 4% on the production to be deducted monthly.

Tax deductions have been cut and other tax rates have increase as well, such as the Municipal Property Tax.

The fiscalist Samuel Fernandes de Almeida declared this Personal Income Tax change was “an unacceptable attack against the middle-class.”

The State Budget will be put to the vote on 31st October. The General Confederation of the Portuguese Workers (CGTP) has organized a demonstration on the same day before the Republic Assembly to protest against the austerity measures and to claim for the Government's resignation.

The demonstration was announced during a march against unemployment, which came to an end before the Parliament.

The former president of Portugal, Jorge Sampaio, said that the Government should create a national union with the three majority parties and ask the Troika for more time and money. Otherwise “a social fragmentation will be unavoidable.”

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