Portuguese government rests on its laurels ahead of election

AP News
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Posted: Jul 30, 2015 7:45 AM

LISBON, Portugal (AP) — Portugal's center-right coalition government is hoping its record overseeing the country's recovery from the brink of bankruptcy will be enough to get it re-elected in October.

The Social Democratic Party and Popular Party took office after Portugal received a 78 billion euros ($85.5 billion) bailout in 2011 during Europe's financial crisis. The left-of-center Socialist Party had been in power for the previous six years.

A general election is scheduled for Oct. 4, and Prime Minister Pedro Passos Coelho said at the launch of the governing parties' joint manifesto late Wednesday that "those who rectify the past hold the keys to the future."

In what was seen as a reference to the Socialist Party, which has promised to cut some taxes and restore four public holidays, Passos Coelho said his political opponents have not learned from their mistakes and would bring a repeat of the financial agony of the past four years.

Austerity measures designed to reduce government debt, including steep tax hikes and cuts in public services, have been deeply unpopular. The government says its hands were tied by the bailout agreement, which was signed by all three major parties and demanded austerity in return for the rescue funds.

Passos Coelho promised "diligent and steadfast" government but offered no major policy initiatives.

However, in a nod to the unpopular income tax burden, the government vowed to phase out a surtax which was introduced after the bailout at the same time as a broad income tax hike. The surtax, currently 3.5 percent of all personal income, will be progressively lowered if the government is returned to office, Passos Coelho said.