Skip to comments.Portugal PM Sets New Austerity Measures
Posted on 09/08/2012 5:49:58 PM PDT by bruinbirdman
--PM says measures will help tackle high unemployment
--Portugal must cut budget deficit to 4.5% this year, 3% next
--Opposition parties criticize more austerity
LISBON--Portuguese Prime Minister Pedro Passos Coelho announced late Friday new measures he will impose next year to meet budget-deficit targets and tackle a sharp rise in unemployment.
In a televised statement, Mr. Passos Coelho said he will increase the social-security contribution from employees to 18% from 11%, while cutting the same payment companies make to the state to 18% from 23.75%.
"We will reduce substantially the costs of labor, providing incentives to investment and job creation," Mr. Passos Coelho said.
Public workers, meanwhile, will lose one installment of salary out of the traditional 14 paychecks they receive each year.
Mr. Passos Coelho was forced to change his plans from cutting two months of salary from public workers next year after a Portuguese court ruled cutting the wages in the public sector alone was unconstitutional.
The prime minister also said he will increase the tax on profits from big corporations and fortunes, without providing details.
Since taking over in June last year, the government raised taxes on products and services, reduced income-tax breaks, cut wages of government employees and increased public-transport prices.
Portugal has been a poster child for the austerity system designed by the European Union, which has been keen to show it is implementing the right solution to the euro-zone crisis. But evidence is growing that some of the measures are putting too much pressure on the already-fragile economy.
Earlier this month, the government acknowledged it would be difficult to meet a deficit target of 4.5% of gross domestic product this year amid lower-than-expected tax revenue.
Last year, the deficit ended at 4.2% of GDP, but mostly thanks to a one-off gain from the transfer
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They are ONLY at 4.2% deficit as percent of GDP? What are we? 6-8%?
Pedro Coelho....Peter Rabbit....