2006 brings higher taxes and prices .jpg

2006 brings higher taxes and prices

PURCHASING POWER is set to fall again this year, heralding another period of belt-tightening for Portugal’s hard-pressed consumers. Most prices will increase by more than two per cent, while public sector salaries grow by just 1.5 per cent.

Tolls, transport, electricity, fuel, bread and tobacco will all increase. Tolls will rise on Lisbon’s 25 de Abril bridge by 4.3 per cent and on Vasco da Gama bridge by five per cent. A light passenger vehicle will now pay 1.2 euros on the 25 de Abril (an increase of five cêntimos) and 2.1 euros on the Vasco da Gama (up one cêntimo). Heavy goods vehicles will pay 20 cêntimos more on the 25 de Abril (up to 5.6 euros) and 30 cêntimos more on the Vasco da Gama (up to 9.55 euros). Motorway tolls will increase by an average of 2.8 per cent.  The increase in the price of fuel will be the biggest since 2000, resulting from the one-off rise in fuel tax of 2.5 cêntimos per litre and a forecast inflation rate of 2.3 per cent. In real terms, this means that a litre of petrol will increase by four cêntimos and diesel by 3.2 cêntimos.

Public transport prices will increase by 2.3 per cent in line with this year’s forecast inflation rate and car tax will rise by the same amount. Domestic users will pay 2.3 per cent more for electricity and businesses will pay a further 8.9 per cent.

Bread and cigarettes increase by 10 per cent

Food and consumer items will also become dearer. In particular, bread and bakery products will rise by 10 per cent.

Smokers can expect to pay 35 cêntimos more a packet. Some brands now cost almost three euros a packet, an increase of more than 10 per cent – but still far cheaper than other EU countries.

The value of the Portuguese national monthly minimum wage is now pegged at 385.9 euros, an increase of 11.2 euros on the previous figure. Prime Minister José Sócrates welcomed this rise as the biggest of recent times, following three consecutive years when it rose by just 2.5 per cent. But the increase is unlikely to compensate for the many price hikes facing consumers.

State pensions of up to 1,000 euros will increase by 2.5 per cent this year. But pensions of between 1,000 and 3,500 euros will rise by only 1.5 per cent and those above 3,500 euros will be frozen. The value of the minimum pension will increase by between three and 10.6 per cent, depending on contributions. Others will rise by just 2.3 per cent.

The price increases are likely to plunge more Portuguese families into debt. A recent survey by the National Institute of Statistics showed that, in 2004, family debt stood at 118 per cent of disposable income. The index of consumer prices also rose in 2004 by 2.4 per cent, with the most punitive increases occurring in the education sector (9.3 per cent) and restaurants and hotels (4.6 per cent). But the cost of clothing, shoes and communications fell.