Portugal is facing “enormous” tax increases next year, according to Finance Minister Vitor Gaspar as he unveiled the harshest austerity budget seen by the country in living memory.
The average levy on wages would rise from 9.8 percent to 13.2 percent. A greater amount of people could end up paying more, with the number of tax categories reduced from eight to five.
Hikes in income and corporate taxes will make up almost three quarters of government revenue in 2013 as the Lisbon tries to adhere to the 78 billion euro bailout programme.
Growth is expected to contract by three percent this year and one percent in 2013.
The new budget sees 1,350 euros cut from public salaries and pensions, and unemployment and healthcare benefits will also be slashed.
On Saturday, thousands of actors, singers and dancers were on the streets of the capital for a day of cultural protests against the austerity measures.