Portugal Government Punishes Citizens for Their Own Mismanagement

Portugal is increasing taxes across the board to reduce the deficit. My guess is that if they cut taxes and government spending even more, they would be in much better shape. Socialists never learn:

The government approved increases in value-added, personal income and corporate taxes, Prime Minister Jose Socrates told a press conference in Lisbon today. He maintained the 2010 goal of a deficit of 7.3 percent of gross domestic product and lowered the 2011 target to 4.6 percent from 5.1 percent.

“These measures are necessary to obtain what’s essential, the financing of the Portuguese economy -- but also to defend the euro,” Socrates said following the weekly Cabinet meeting.

Socrates said he wants the burden of the measures to be shared among all taxpayers instead of the initial approach of relying on spending cuts and freezing salaries of state workers, who responded with strikes. Neighboring Spain’s UGT union said today that it will call a one-day work stoppage by public-sector workers in June to protest government spending cuts.

Portugal’s top value-added tax rate will rise to 21 percent from 20 percent, companies will face a tax surcharge of 2.5 percent of income and individuals will pay an additional 1 percent to 1.5 percent, Socrates said. The tax increases will last through the end of 2011.