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Lisbon to swap tax rises for spending cuts

Lisbon to swap tax rises for spending cuts
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Portugal’s government is to tone down sweeping tax rises proposed for next year to tackle the country’s mountainous debt crisis, and will replace them with spending cuts instead.

Trade unions called a general strike about the tax plans and even the international rescue team of lenders thought it was too much.

After a meeting of Eurogroup ministers in Luxembourg the Portuguese finance minister Vitor Gaspar said: “Some of the aspects of these measures may be changed, and we’re working on reducing the expected tax increase.”

Portugal is grappling with austerity measures to meet the terms of a 78-billion euro bailout from the troika of EU and IMF lenders. The budget, to be presented to Parliament on Monday, had concentrated on rises in property and income tax and a new tax on financial transactions.

Average income tax had been due to rise to just under 12 percent, from just under 10.

It is Portugal’s worst recession since the 1970s and it looks set to continue throughout next year.