Portugal Rules Out Tax Hikes In 'Extraordinary' Budget
23 April 2013
Posted by: Author: Ulrika Lomas
Source: Ulrika Lomas
Portugal's Council of Ministers has recently confirmed that there will be no further tax rises provided for within the framework of the country's 2013 "extraordinary" Budget.
Unveiling details of plans to ensure compliance with the 5.5% deficit target for this year, as agreed with international moneylenders, the Council of Ministers provided its assurances that the tax burden will not increase. The savings are to be realized via expenditure cuts amounting to around 0.5% of gross domestic product. The Government plans to impose sweeping cuts to "all budget programs," and to renegotiate public-private partnerships.
Portugal must comply with its deficit target to guarantee the disbursement of the eighth tranche of its international loan, and to ensure that the loan payment terms are extended.
The Government was forced to identify new savings, following the Constitutional Court's decision to reject some of the austerity measures contained in the initial 2013 Budget. The Court censured plans to remove the 14th month of salaries for civil servants and pensioners, and blocked plans to introduce a levy on unemployment and sickness benefit.
To comply with the Court's decision, the Government has said that it intends to establish a minimum limit, below which the contribution will not be applied. This is to ensure that low benefits are not subject to taxation.
Budget Minister Luis Morais Sarmento announced that the extraordinary budget for 2013 is to be presented in May.