Portugal considering tax hikes after court ruling

AP News
Posted: May 31, 2014 1:57 PM

LISBON, Portugal (AP) — Portugal's government is considering raising taxes after the country's highest court rejected austerity measures included in its 2014 budget.

The cuts are part of Prime Minister Pedro Passos Coelho's plans to help the economy emerge from the painful economic constraints imposed by a three-year international bailout that saved the country from collapse.

The Constitutional Court ruled Friday that cuts to public sector wages, pensions and health allowances are unconstitutional.

The decision leaves a budgetary shortfall and Passos Coelho says he "cannot commit to not raising taxes" as the cuts were worth some 750-million-euros ($1 billion).

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Portugal became the second eurozone country after Ireland to free itself from the austerity and oversight imposed by its European partners and the International Monetary Fund as part of its 78-billion-euro ($107 billion) bailout.