Portugal Turns to Tax Hike After Austerity Voted Down

Portugal’s government is considering raising taxes after the country’s highest court rejected austerity measures included in its 2014 budget.

The cuts are part of Prime Minister Pedro Passos Coelho’s plans to help the economy emerge from the painful economic constraints imposed by a three-year international bailout that saved the country from collapse.

The Constitutional Court ruled Friday that cuts to public sector wages, pensions and health allowances are unconstitutional.

The decision leaves a budgetary shortfall and Passos Coelho says he “cannot commit to not raising taxes” as the cuts were worth some 750-million-euros ($1 billion).

Portugal became the second eurozone country after Ireland to free itself from the austerity and oversight imposed by its European partners and the International Monetary Fund as part of its 78-billion-euro ($107 billion) bailout.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza