Portugal president signs 2013 budget into law: TSF

Reuters News
Posted: Dec 31, 2012 7:50 AM
Portugal president signs 2013 budget into law: TSF

LISBON (Reuters) - Portugal's president has signed into law a 2013 budget that includes the biggest tax hikes in living memory but will ask the constitutional court to check its legality, private radio station TSF reported on Monday.

The president's move at least allows the budget to take effect as of January 1. However, far-left political parties have said they would challenge the tax plans in the courts and political analysts have said the increases in the tax burden could be unconstitutional.

Portugal's constitutional court challenged a fiscal measure last year, forcing the government to adopt an alternative.

In France, Europe's second-biggest economy, the Constitutional Council on Saturday rejected a 75 percent upper income tax rate to be introduced in 2013.

But while the French tax move was an attempt by Socialist President Francois Hollande to make the rich contribute more to the national finances, Portugal is hiking all its taxes in a drastic effort to meet the budget goals of its bailout from the European Union and International Monetary Fund.

Portugal sank into its deepest recession since the 1970s this year and a third year of economic shrinkage seems inevitable in 2013.

Monday is the last possible day for President Anibal Cavaco Silva to sign the budget document into law.

Nobody was immediately available to comment at the presidential palace.

(Reporting By Filipa Cunha Lima and Axel Bugge; Editing by Ruth Pitchford)