Portuguese PM vows not to raise taxes this year

Portuguese Prime Minister Pedro Passos Coelho said he will not raise taxes this year and remains confident that the country will reach its growth goal, local media reported Monday.
"There won't be a tax rise," Passos Coelho told journalists in Valpacos City, some 450 km northeast of Lisbon.
On Saturday, commentator and former PSD party leader Marques Mendes said on national television that the government was getting ready to raise value-added tax (VAT) from 23 percent to 24 percent.
Passos Coelho said measures of a "fiscal nature" were "not on the table," claiming an alternative to the recent cuts -- ruled out by the country's Constitutional Court -- had not yet been determined.
These would be discussed in next week's extraordinary reunion with ministers of state, he added.
On Aug. 14, Portugal's Constitutional Court rejected a government proposal to cut salary for public sector employees between 2016 and 2018 and to impose a tax on public sector pensions. However, it approved public-sector salary cuts for 2014 and 2015.
Days after the court's ruling, the country announced that public debt had risen to 134 percent of gross domestic product (GDP) at the end of June, the highest rate in Europe. This sparked outrage among the country's main opposition Socialist Party, who accused the government of "fiscal suffocation."
The government had predicted public debt would peak at 130.2 percent of GDP this year.
However, on Sunday, Passos Coelho insisted that the country's target to cut the budget deficit to 4 percent of GDP for this year was reachable.
The country still has to cut its budget deficit to 2.5 percent in 2015. Passos Coelho pointed out that the court's decision now meant that the government would have to make some readjustments in the state budget, and didn't exclude the possibility of raising tax in the future.
Portugal signed a 78-billion-euros (103 billion U.S. dollars) bailout with the troika of its international lenders -- the European Central Bank, the European Commission and the International Monetary Fund -- in 2011. Since then, it has had to raise taxes and cut spending to meet the targets set by troika.
The country officially ended that program in May this year, but the country only emerged from its deepening recession in the second half of last year.
Though the unemployment rate has dropped from 15.1 percent in the first quarter to 13.9 percent in the second quarter, it still remains among the highest in Europe.
The Portuguese center-right government is planning to approve the debt-laden country's amended budget on Tuesday.