LISBON (AFP) - – Portugal announced Thursday a fresh austerity package following eurozone partner Spain's lead, aiming to halve its budget deficit by 2011 with a series of tax hikes and salary cuts for public servants.
"Next year, we are going to reduce the deficit to 4.6 percent (of gross domestic product,)" Socialist Prime Minister Jose Socrates said after a cabinet meeting.
In 2009, the deficit came to 9.4 percent, one of the highest in the eurozone and way above the European Union's three percent limit.
The government earlier targeted a 2011 shortfall of 5.1 percent but a growing crisis sparked by massive debt and deficit problems in Greece has forced eurozone member states to take even more difficult measures.
Socrates reiterated that his minority government would aim for a 2010 public deficit of 7.3 percent, rather than the previous target of 8.3 percent.
The prime minister said sales taxes would rise by one percentage point to 21 percent to increase revenues while costs would be reduced, with salaries for civil servants and public officials, including ministers, cut by five percent.
He said an income tax surcharge of 1.0-1.5 percent would be levied on higher earners while large companies making profits of more than two million euros (2.5 million dollars) would be taxed at 27.5 percent, up from 25 percent.
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