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Tax receipts drop in recession-hit Portugal

Published on 23/08/2012

Portugal is facing a drop in tax revenue that could see the adoption of new austerity measures or a revision of the goal to bring the deficit to 4.5 percent of GDP this year, according to data published Thursday.

The budget office said that from January to July, tax receipts had dropped 3.5 percent compared to the same period last year. The government was hoping for an increase of 2.6 percent by the end of the year.

An official from the finance ministry told Portuguese news agency Lusa that the shortfall could not be corrected by the end of the year, so the government must adopt new austerity measures or else have its international creditors relax budget requirements.

A spokesman for the finance ministry confirmed to AFP the official’s remarks but did not comment further.

Portugal is already carrying out austerity policies under a 78-billion-euro European Union-International Monetary Fund bailout. The measures are expected to see the country experience a three-percent shrinkage of its economy this year.

Portugal’s unemployment rate recently hit 15 percent overall. For young people, the rate is about 35 percent.