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Portuguese Lawmakers Give Budget Green Light

by Ulrika Lomas,, Brussels

29 November 2013

The Portuguese Parliament (AR) has adopted the country's State Budget for 2014 (OE 2014), despite opposition from the Socialist Party (PS).

In the closing session ahead of the final vote, PS leader António José Seguro warned that the OE 2014 carries with it "the mark of impoverishment and social inequality," accusing the Government of a fake consensus and "constitutional provocation." The Government may try to conceal the facts, but the Portuguese citizens know that they will burdened with more sacrifices, Seguro insisted, pointing out that the "brutal tax rises" are in addition to new cuts in public sector wages and pensions.

Lamenting the fact that an overwhelming majority of the budgetary amendments, put forward by the Socialist Party, had been rejected, Seguro concluded by maintaining that the OE 2014 is neither the budget that the Portuguese want, nor the budget that the country needs. The PS has threatened to launch a constitutional challenge to the legislation.

Defending the budget, Portugal's Finance Minister Maria Luis Albuquerque emphasized that the legislation is both reliable and necessary. The fiscal consolidation measures provided for in the text are vital to ensuring that the budget deficit is reduced to 4 percent of gross domestic product (GDP), in line with the country's commitments to its international partners and to other European Union states, she made clear. The provisions will further increase credibility and trust, thereby enabling Portugal to regain full access to market finance, Albuquerque said.

Furthermore, the Minister underscored that the predominance of expenditure-based measures will serve to minimize the economic cost to the country, and to lay the foundations for sustainable public finances. Reiterating that the OE 2014 ensures a swift transition to a post-troika period, Finance Minister Albuquerque ended by underlining that the truth is that the additional effort demanded from households and businesses in Portugal is "effectively transitional" and guarantees a brighter future for the country.

Portugal's OE 2014 provides for the extraordinary solidarity contribution to be maintained, for a rise in car and diesel tax, as well as for an increase in taxes on alcohol and tobacco. Under the plans, the energy and banking sector will see their contributions rise, and real estate funds will be subject to taxation. However, to boost investment and to increase the competitiveness of businesses, corporation tax (IRC) will be cut in 2014, from 25 percent currently to 23 percent.

TAGS: Finance | tax | investment | business | pensions | Portugal | energy | public sector | banking | gross domestic product (GDP) | budget | corporation tax | legislation | tax rates | tax reform | Europe

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