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Video: Portugese protest against tax increase

11-01-2012 13:58 BJT

Thousands have taken to the streets of Portugal's capital, Lisbon to protest against tax increases. Parliament has approved measures to meet the terms of the international bailout. But as Julie Scheier reports, economists are worried about the fallout.

The government of Prime Minister Pedro Passos Coelho has backed the biggest tax increase in Portuguese history. This is the Government’s third attempt to tackle the deficit since July and the only way of keeping afloat its 78 billion euro bailout deal with the so-called Troika, the European Commission, the European Central Bank, and the International Monetary Fund.

"The lack of existence of a state budget would be, in itself, a serious indicator of infringement of the memorandum with the ’Troika’. A political crisis in those circumstances would expose Portugal to more risks considering the instability that is still felt in countries, such as ours, that belong to the Eurozone."

The 2013 budget aims to cut Portugal’s public deficit to 4.5 percent; many analysts say it’s a severe and austere one that pushes Portugal further into a recession and that will have a negative social and economic impact on the country. Fiscal Attorney Tiago Caiado Guerreiro said it could be challenged in court.

"It is budget that makes no sense, because economically it will destroy the sources of producing wealth instead of cutting the problem of Portugal, which is to much public expenditure. It will take away not only income from people but also their property so it will consist in a confiscation and a confiscation is unconstitutional".

In the streets, discontent has been growing, and outside Parliament after the budget was passed hundreds of protesters gathered to demonstrate their anger. The Portuguese are scarred of what is to come and many are certain that they are heading for a Portuguese version of a Greek tragedy

"With these taxes the internal market will collapse and that will mean that we will have more unemployment and less revenue for the state and then in one year we will be worst, our way is Greece"

"The economy is getting worse no jobs no money circulating, its not ok."

Portugal’s center right coalition Government parliamentary majority saw the 2013 budget pass, but the opposition, the socialists and the majority of the Portuguese have vowed to challenge it.

Editor:James |Source: CCTV.com

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