Austerity: New measures include income tax hike | Portugal Daily View

Minister of Finance V?tor Gaspar, Prime Minister Passos Coelho and Minister of the Economy ?lvaro Santos Pereira during the meeting with the social partners (Photograph: M?rio Cruz/LUSA)

Portugal?s Prime Minister Passos Coelho confirmed this Monday the government had scrapped the plan to lower company-paid social security contributions and would compensate the controversial measure with a hike in income tax while stressing the country was fully committed to the bailout programme.

The government met with the social partners ? bosses and trade unions ? this Monday morning to?discuss alternatives to the disputed proposal to increase employee social security contributions while lowering those supported by companies.?Pedro Passos Coelho said the?cabinet?was considering an increase to income tax that would affect workers in both the public and private sectors. For public servants this would mean seeing part or all of one of their two annual bonuses (Christmas or holiday pay) restored, after being scrapped last year. The tax hike would not only be applied to wages but also to capital and property.

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EU awaits equivalent measures

The European Union was awaiting the new measures soon, said a European Commission spokesman earlier Monday, adding that the measures should equal ?both in figures and in quality? the revised adjustment plan.

It is for the Portuguese authorities to decide on measures that substantiate both in figures and in quality ? I insist both in figures and in quality ? the agreed fiscal adjustment path as recently revised,? spokesman Olivier Bailly said.

Bailly said the EU was aware of the consultation process with social partners in order to come up with alternatives to the government?s controversial new austerity measures, noting this does not change the overall agreement.

?It doesn?t change the target and it doesn?t change the overall agreement,? the spokesman said, asking the Portuguese authorities to be as quick as possible.

?Of course the Portuguese authorities are well aware of their financial needs and of the necessity to move as soon as possible to have the Eurogroup agree on the next disbursement,? he said.

Source: http://www.portugaldailyview.com/02-politics/austerity-new-measures-include-income-tax-hikes

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