Portugal Socialists challenge 2013 budget in court

Reuters News

1/4/2013 8:40:47 AM - Reuters News

LISBON (Reuters) - Lawmakers from Portugal's opposition Socialist party challenged the 2013 budget in the Constitutional Court on Friday, a move that could hamper government efforts to meet the terms of the country's bailout.

The government already faces rising public anger at the largest tax hikes in memory, due to take effect this year, and legal challenges to the budget could raise uncertainty regarding the bailed-out country's finances.

President Anibal Cavaco Silva sent a similar but unrelated query to the same court this week.

"There are fundamental principles at stake that are essential, such as confidence, equality over the distribution of public responsibilities and the principle of proportionality," Socialist lawmaker Alberto Costa told journalists.

The Socialist Party was in government when Portugal first requested the 78-billion-euro bailout from the European Union and International Monetary Fund in 2011 but opposes the current government's strategy for meeting the aid deal's demands.

Any decision by the court to overturn measures in the budget would be a setback to government efforts to ensure strict fiscal goals set out under the aid package are met.

Costa said the lawmakers had posed questions for the court related to social security and pension rights and taxation.

"We are certain the court will bring good news to the people who have been treated unjustly by this budget," he said, adding he believed the court could deliver a quick decision.

Opponents of the austere 2013 budget say it undermines many basic rights for Portuguese workers because it cuts pension and civil servants' salaries and chips away at welfare benefits.

The risks the legal challenges pose are difficult to quantify but the court ruled against the government last year over a measure to cut holiday bonus payments to civil servants, forcing it to find alternative belt-tightening measures.

Last year, the court's decision came six months after the budget came into effect. It has said it has no timeframe for a decision regarding the 2013 budget.

Some 50 of the Socialists' 74 lawmakers signed the request sent to the court, including party leader Antonio Jose Seguro. Last year only 18 Socialist lawmakers signed the challenge to the court, breaking with the party's leadership.

Costa said it would be up to the government to decide the political implications if measures are ruled inconstitutional.

More challenges to the budget are likely to be presented to the court by the leftist Left Bloc and Communist parties.

The budget measures challenged by the president and the Socialists amount to about 1.6 billion euros, or 1 percent of gross domestic product.

(Reporting By Daniel Alvarenga, Sergio Goncalves and Axel Bugge; Editing by Catherine Evans)