Portugal raises income tax to cut debt in new austerity move

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Portugal raises income tax to cut debt in new austerity move

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Public anger in Portugal is likely to go up another notch after the government announced a steep rise in income tax to reduce the country’s debt load.

Successive rounds of austerity measures have brought a wave of protests. Three weeks ago there were demonstrations around the country.

Trade unions have announced a general strike for November 14.

The Finance Minister Vitor Gaspar himself describes the new tax hike as “enormous”.

“The average rate of income tax will go up from 9.8% to 11.8%. Of course, the higher the income, the higher the tax rate will be. These changes will guarantee that people’s contributions will lead to a more equal distribution of revenue in Portugal,” he said.

The minister said the country was at a moment of “financial crisis and social emergency”.

There is also to be a 4 percent tax surcharge on wages. The Prime Minister Pedro Passos Coelho recently caused outrage when he announced measures bringing a sharp cut in take-home pay.

Until recently the Portuguese had largely accepted belt-tightening with some degree of resignation.

But there have been signs that some measures are pushing people’s tolerance to breaking point.