A 129 document has been issued by the Portuguese Government outlining their plans for the next 4 years, including austerity measures needed to comply with the EU bailout. Details have not been finalised yet, but some clarifications are expected over the next 2 weeks.
An increase of between one and two percent in IVA is widely forecast by analysts and that could be implemented during this month.
Changes to employment rules and severance pay, and possible changes to employees Social Security contributions are also expected to be announced in the next 2 weeks.
The budget deficit reached 7.7% of GDP in the first quarter of this year, 1.8% below the ‘Bail out’ agreed target.
There is also expected to be losses of some fiscal privileges. Each year, taxpayers claim back millions of euros in expenses, some of these are expected to be removed this year. Expenses linked to children and mortgage interest payments are expected to be cut.
Council tax exemptions are expected to be cancelled, although any existing agreements will be honoured.
The charging of tolls on SCUT motorways is back on the agenda after the previous government suspended the decision in April pending the general election. The 4 remaining SCUT motorways that do not have tolls are expected to start charging in September or October 2011.