Portugal finance minister announces an income tax hike for the 2013 budget as the unemployment rate is expected to hit 16.4% the same year.
On Wednesday, the Portuguese Finance Minister Vitor Gaspar had announced that the average tax hike would rise from 9.8 percent to 13.2 percent in 2013, adding that the unemployment rate is also expected to rise from 16 percent to 16.4 percent next year.
The minister said the new austerity measures include a 4.0 percent “extraordinary tax” with Portugal’s income tax brackets reduced from eight to five.
The recently announced austerity measures have been designed to replace the critically defamed proposals arranged earlier.
This comes as train drivers in Portugal have begun a five-day strike on Monday to express their anger over new austerity measures imposed by the country’s government.
Meanwhile, the global economic institutions including European Central Bank (ECB), International Monetary Fund (IMF) and the European Union (EU) are keeping an eye on Portugal’s implementation of spending cuts and reforms required in return for the 78-billion-euro (USD 102 billion) rescue package the country received in 2011.
The international creditors have agreed to relax Portugal’s deficit targets for 2012 and 2013, rewarding the Portuguese for pushing through reforms.
Battered by the global financial downturn, the Portuguese economy fell into a recession which led the country to negotiate in 2011 with the IMF for a bailout loan.
Spain, Greece, Italy, Cyprus and Portugal are all in recession and all five are receiving financial assistance from European bailout funds.
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