5 of the tax on the profits of big business

Over the weeks, or days, the Portuguese see note of the economic crisis is increasing. The Socialist Government of José Socrates, who had announced his intention to redouble their efforts in the wake of the presentation, Monday, of support for the Greece megaplan, exceeded all expectations. The objective that it has set, yesterday, to reduce the amount of deficits of 9.4 of GDP in 2009 to 7.3 per cent this year, against the initially planned 8.3, to reach 4.6 in 2011, is even more drastic than expected.

After meetings in Brussels, 5.1 was, indeed, referred for next year. What will arrive by an extra effort of 2 billion euros, found via a next increase the tax burden.

If the pressure is somewhat lean market debt where the Portuguese Treasury could issue, Wednesday, to 1 billion euros of bonds for ten years at a rate of 4.42, 181 points of base less than last week, some such as John Lipsky, the number 2 of the IMF, asked again, these days, higher fiscal adjustment. At the beginning of week, the rating agency Moody's was a likely decline in the characterization of Portuguese debt from Aa2 to Aa3, here in four weeks. End of April, its rival Standard & Poor's had already degraded from A to A-with a negative perspective the note of the note in the long term of the Portugal. Debt of the latter should climb to more than 86 at the end of the year.

Having established a "Pact of State" to the crisis with Pedro Passos Coelho, the new leader of the social democratic party, the main opposition force, in the wake of the announcement of S & P, the Portuguese Prime Minister again reviewed its copy, yesterday, for the third time since the beginning of the year.

Major frost

A thus decided, from July, an increase in widespread tax of 1.5 for earnings to 2.375 euros and 1 below, and an increase of 25 to 27.5 of the tax on the profits of big business. At the same time, the VAT will increase by 1 point to 21, and the remuneration of the leaders of public enterprises and the political class will be reduced by 5. New major investment projects, such as the construction of a new airport in Lisbon and a bridge over the Tagus, will be frozen.

Previously, the Government had advanced to this year the entry into force of a 20 tax on stock market gains, originally scheduled next year. This in addition to many other measures: increased to 45 of the tax rate of 150,000 euros earnings year; a freeze on salaries of officials which will be reduced from 73.000 positions over four years; a reduction in the budget for the defence of 40; cuts in major railway projects to a reduction of unemployment; the installation of new highway tolls and a program of privatization of EUR 6 billion.

Only thinning in this very dark sky, the Portugal recorded a growth of 1 of GDP in the first quarter, bringing the rate to 1.7 over a year. The Government table for all of 2010 on an increase of 0.7, a level considered optimistic by Brussels, which considers the progression to 0.5.