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Portugal’s Ruthless Budget Revealed

A draft of Portugal’s budget for 2013 has been revealed and the Portuguese population are not impressed. Nor, unsurprisingly, is opposition Socialist Party leader Antonio Jose Seguro who described the recently disclosed budget as ‘a fiscal atomic bomb’.

Although Spain and Greece have dominated Eurozone news in recent months Portugal is struggling too. The European nation is sunk in its worst recession for 40 years and the already high employment level is expected to grow to over 16 per cent in the months ahead.

Last year Portugal was granted a bailout worth in the region of 78 billion Euros and now the government has compiled one of the harshest budgets in the country’s history in order to meet the conditions of it.

Portuguese Finance Minister Vitor Gaspar asserted that if the nation was to adhere to the terms of its bailout agreement it had ‘no room for manoeuvre.’ In his view this harsh budget would help Portugal lower its budget deficit to 4.5 per cent of GDP next year, 1.5 per cent above the target set by the European Union.

In the budget draft, 2013 would see the average income tax rise jump from 9.8 per cent to 13.2 per cent – which for many workers amounts to a month’s wages. The budget also referred to the loss of 1,200 public sector jobs as part of the the 2.7 billion Euro’s of spending cuts.

Under these outlines capital gains tax will jump by 3 per cent to 28 per cent, income tax brackets will be reduced from 8 to 5 and there will be a one-off surcharge of 4 per cent levied against all workers earnings next year.

The CGTP (Portugal’s main trade union) commented that these plans are ‘an attack on the dignity of the people’.

However, Gaspar further commented: ‘Asking for more time [under the bailout] would lead us to a dictatorship of debt and to failure’.

It appears that the Portuguese public don’t agree with their Finance Minister. In the latest in a long line of anti-austerity demonstrations roughly 2,000 protestors made their anger known, amassing outside Parliament yesterday and demanding that the government resign. They were heard to chant: ‘The people united will never be defeated.’

It also seems the people united don’t plan to give up – a general strike is planned for the middle of next month.


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