Portugal Approves Tax Hike Plans

November 1, 2012 Taxation in Portugal

austerity hits taxpayersLISBON – Portuguese taxpayers are could soon feel the brunt of new austerity measures, including new taxes and several tax increases.

On October 31st the Parliament of Portugal approved the first reading of the 2013 national budget, which contains several new austerity measures, including cutting government spending by EUR 1 billion, the implementing a new transaction tax, and increasing the rates of income, capital gains, wealth taxes, which will cumulatively bring additional revenues of approximately EUR 4.3 billion.

The changes outlined in the proposed budget are intended to reduce Portugal’s deficit to below 4.5 percent and to ensure that the country meets the terms of its EUR 78 billion bailout package from the International Monetary Fund and the EU.

The budget reading was approved by all 132 members of the ruling coalition, but none of the 98 members of the opposition showed their support for the proposed plan.

Opponents of the tax hikes claim that the increases will slow down the national economy, and will increase the country’s unemployment rate, which currently stands at approximately 15 percent and is expected to rise above 16 percent next year.

Local experts have warned that the new budget could face possible legal challenges in the near future, as allegations have already arisen that the new tax hikes are unfair and their implementation could violate national legislation.

The final vote on the budget plan is currently scheduled to be held on November 27th, following further debates over the fine details of the proposals.

Photo by Trowbridge Estate