LISBON, Portugal (AP) - Portugal's new anti-austerity prime minister said Wednesday he intends to free the country's middle-class from "suffocating taxes" as part of his plan to relaunch the economy, despite fears the belt-loosening could bring back the eurozone country's debt problems.
LISBON, Portugal (AP) — Portugal's new anti-austerity prime minister said Wednesday he intends to free the country's middle-class from "suffocating taxes" as part of his plan to relaunch the economy, despite fears the belt-loosening could bring back the eurozone country's debt problems.
Easing the austerity measures imposed after a 78 billion-euro ($82.6 billion) bailout four years ago will put more money in Portuguese pockets and bring a fresh spurt of growth, Socialist Prime Minister Antonio Costa told Parliament in his first policy speech.
Costa has been an opponent of the high taxes, pay cuts and pension freezes that have remained in place despite last year's end of Portugal's bailout recovery program. Eurozone leaders, however, are watching carefully to see whether debt-heavy Portugal strays off the path of fiscal consolidation.
"This government will not serve Europe against the Portuguese," Costa said, though he has vowed to abide by eurozone fiscal discipline.
His critics say more disposable income for households will backfire by increasing imports, while reversing pay and pension cuts will worsen the budget deficit, which has fallen to around 3 percent after exceeding 10 percent in 2010.
Costa took office last week after assembling an anti-austerity alliance with the Communist Party and radical Left Bloc to unseat a center-right minority government that won October's general election.
Costa promised to restore government workers' pay that was cut, raise the minimum salary from 505 euros a month to 600 euros ($634), slash restaurant sales tax to 13 percent from 23 percent, and reduce the 3.5 percent surtax on everyone's monthly pay, though he didn't say by how much.
Costa has provided few details on how the government plans to pay for all that. He has said the government plans to make savings — for example, by eradicating hospital infections, which cost the public health service some 300 million euros a year.