Portugal braces for more tax hikes amid criticism

The Portuguese government announced on Wednesday it would lift value-added tax from 23 percent to 23.25 percent and tax on labor income from 11 percent to 11.2 percent. The measures are aimed at meeting the targets set in the 78-billion-euro bailout program the country has signed with the International Monetary Fund, the European Commission and the European Central Bank in May 2011. The troika are expected to bring in around 150 million euros in 2015, equivalent to 0.1 percent of Spain's GDP. Meanwhile, the country's main opposition party, the Socialists, accused the ruling government of deceiving the Portuguese, saying the government was leading the country to a "future of poverty." Finance Minister Maria Luis Albuquerque stressed that it was the only way to help achieve the country's budget deficit target. "We have to maintain this course," she told a press conference. "I envision a conservative and cautious approach." Portugal has the highest labor income tax among countries of the Organization for Economic Cooperation and Development (OECD), according to the Paris-based group. Although the country has made remarkable progress in emerging from its deepest recession in 40 years and achieving the highest growth in the eurozone, its debt is still too high and austerity has had huge social costs, especially for the elderly. The debt-laden country is due to end its bailout program on May 17 and is expected to follow Ireland's footsteps by achieving a clean exit.