More confusion has been unleashed in the Portuguese press this morning as it is variously reported that Prime Minister Passos Coelho has “guaranteed” that taxes will not rise any further this year, but that IVA – already pegged at 23% and among the highest in Europe – may well be increased to 24% as early as October.
To be fair, Passos Coelho has not put a date on the increase – but former PSD leader Marques Mendes declared in his regular slot on SIC TV on Saturday evening that the government was finalising its decision, and an announcement would be made “within the next few days”.
Meantime, the government is scrabbling together a new set of money-saving policies as a result of the various vetoes over pension cuts handed down by the Constitutional Court earlier this year.
Addressing a meeting packed with both admirers and banner-waving protesters on Sunday, the prime minister said the way ahead involved “cutting expenditure and suspending investment”.
How this will promote economic growth was left hanging in the air.
What the PM did confirm was that a Council of Ministers on Tuesday will be discussing how state expenditure can be further slashed in the months ahead.
As Marques Mendes warned, a coalition war (or certainly an increase in behind-the-scenes conflict) seems certain, as Deputy PM Paulo Portas of the CDS is wholeheartedly against any increase in taxation of any kind.
