Finance Minister, Maria Luis Albuquerque, announced the main points of her proposed 2014 budget this week, saying that there was no plan B if the Constitutional Court found against any of her fundraising or cost-cutting schemes.
Many of Alberquerque's plans involve long-overdue state cost cuts rather than relying on the taxpayer to continue funding a state sector that not only is largely inefficient but still chronically bloated. A full 70% of Portugal’s state spending goes on pensions and wages.
Following a long tradition of failure to hit any agreed target Albuquerque said that Portugal’s deficit will be 5.9% of GDP for 2013 against the only recently agreed 5.5% figure. This just pushes more pain into next year to keep the Troika of lenders at bay.
There will be further cuts in wages for those paid by the state of between 2.5% and 12% on earnings over €600 a month, a move guaranteed to end up in the Constitutional Court’s in-tray.
Despite the minister for the economy, Pires de Lima’s broad hints that VAT would drop back to 13% for the restaurant sector this is not to be, causing embarrassment and anger in equal measure shared between himself and the association representing what’s left of the country’s restaurateurs.
The finance minister said there would be major cuts made in public companies such as for those in the transport sector, many of which are being dragged down by liabilities incurred unnecessarily from taking on totally unnecessary Swaps contracts with her knowledge, despite her protestations that this is not the case.
The nation’s private vehicle owners get off lightly as diesel duty and road tax goes up by just 1%. However new car sales are dealt another blow, a fatal one for many dealerships, as changes to the tax treatment of company cars means simply that no company management in its right mind will buy a company car from now on.
Like any politician, Albuquerque felt fully justified in blaming the 'last lot' rather than accepting the current regime’s lengthy and poor track record in cutting the vast state burden than an increasingly smaller and poorer pool of taxpayers are forced to fund, or emigrate – many are taking the latter option.
The tax rate on alcohol and tobacco is rising and the retirement age is now set at 66 years old.
A cruel joke is corporate income tax which is being eased two points to 23%. So few companies pay this tax that that the affect will not make any difference at all to the state’s finances.
Employment levels in the prime minister’s office remain unaffected with Pedro Passos Coelho’s back office costing the taxpayer €134,900 each month. The team of 60 has one chief of staff, 9 advisers, 5 deputies, 5 technicians, 10 secretaries, 19 members of support staff and 11 drivers for the luxury cars necessary to ferry the top man from meeting to meeting. This all adds up to €1.6 million a year, not including the cost of the cars.
Each secretary earns €1,882 a month. Ten of the eleven drivers receive €1,849 a month, with one on €2,028. Rear Admiral Fernando Tavares de Almeida is an ‘adviser’ to the prime minister and receives €3,883 a month. The remaining eight advisors each earn €3,654. Passos Coelho’s chief of staff, Ribeiro de Menezes, struggles by on €4,592 a month.
So all in all it's more of the same from Alberquerque in this uninspired piece of work, painful for those that work in the state sector
