News Summary: Portugal sets tax hikes amid outcry

News Summary: Bailed-out Portugal, seeking to raise cash, introduces tax hikes despite outcry

Associated Press
News Summary: Portugal sets tax hikes amid outcry
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People walk along a pedestrian street in downtown Lisbon, Monday, Jan. 14, 2013. The Portuguese center-right coalition government has been implementing a tough packet of economic measures, that includes a significant tax increase, linked to a euro 78 billion ($100 billion) international bailout needed in 2011. (AP Photo/Francisco Seco)

NEW RATES: Portugal's government has published new tax rates that critics say will deepen hardship and doom hopes for an economic recovery.

MIDDLE CLASS HIT: Someone earning €41,000 a year will now pay 45 percent income tax, compared with 35.5 percent previously. The latest measures also include a 3.5 percent surcharge tax on everyone's earnings. Tax-deductible items such as mortgages and health care are also cut.

CALLED UNAVOIDABLE: Trade unions, business leaders and opposition parties say the new taxes will reduce spending power and compound the recession. Finance Minister Vitor Gaspar says they are unavoidable if Portugal is to meet the debt targets stipulated in the bailout agreement.

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