Crisis Tax Angers Trade Unions in Portugal

To accelerate cuts in the country's gaping budget deficit, Portugal's prime minister, is expected to announce tough new austerity measures, including a "crisis tax" on companies and wages.

This new package is being introduced under pressure from Portugal's European Union partners for sharp budget cuts in support of a €750bn emergency plan to defend the euro.

Such asceticism packages, which have already been taken up by Spain, Greece and Ireland, have angered the trade union leaders, who, on Thursday, called for a "mobilization" against what they called "harsh and unjust" dealings. They are expecting the government to include a 1 percentage point increase in value added tax to 21 per cent and increases of up to 1.5 percentage points in income tax.

The increases, which are being called a "crisis tax", are expected to include a 2.5 percentage point increase in corporate tax to 27.5 per cent. Politicians and public sector managers will also see their salaries cut by 5 per cent.

The new compute, which is anticipated to reduce transfers by £100m this year, had been essentially designed to lessen the budget deficit by an additional €2.1bn, from 9.4 per cent of gross domestic product in 2009 to 7 per cent this year and 2.8 per cent in 2013. Portugal's original deficit target for this year was 8.3 per cent of GDP.

To ensure parliamentary support for the measures, the minority Socialist government negotiated the new austerity drive with the centre-right Social Democrats (PSD), the main opposition party.

Manual Carvalho da Silva, head of the CGTP-Intersindical union confederation ,however ,feels that this package is sure to place many families in great difficulties, if not real poverty.