Three income tax bands will be scrapped, finance minister Vitor Gaspar said, bringing the number from eight to five, and raising the average income tax rate from 9.8 per cent to 11.8 per cent. Earners will also be hit with a four per cent income tax surcharge during 2013, as well as a financial transactions tax and taxes on capital and luxury property.
This came as Portugal re-entered the bond markets for the first time since last year.
The debt agency sold €3.8bn of October 2015 bonds, in exchange for bonds maturing in September 2013. “The size of the swap is very decent...reflecting that there are investors...who have confidence in Portugal’s... outlook,” said Orlando Green at Credit Agricole.