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Portugal plans gradual company tax cuts to revive economy

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(Globalpost/GlobalPost)

LISBON (Reuters) - Portugal's government plans to lower company tax rates "significantly" as part of a wider plan of incentives to drag the economy out of its worst recession since the 1970s, Economy Minister Alvaro Santos Pereira said on Tuesday.

"We want more investment and the main instrument here is the reform of the company tax that we intend to carry out via a significant decrease in tax rates to make investment more attractive," he told a briefing.

"Although significant, the tax decrease will have to be gradual because we don't have the financial conditions to make a very swift cut," he added.

The government has already said earlier any plan of economic incentives would not compromise budget goals agreed under its international bailout.

The minister also said the government planned to step up the financing of the economy by state-owned bank CGD that will provide 1 billion euros this year and 2.5 billion in 2014, and later to create a development bank to boost such funding further.

The tax reform and other measures, he said, will still have to be discussed with employers, unions and the opposition. He did not provide further details of the planned tax cuts.

The growth plan is also aimed at trying to win back a broad political consensus for the EU/IMF bailout after the main opposition Socialists refused to back any more austerity. The coalition government has a comfortable majority in parliament, but Lisbon's lenders want broader support to give the reforms a better chance of long-term success.

(Reporting By Andrei Khalip and Filipe Alves, editing by Shrikesh Laxmidas, Ron Askew)

http://www.globalpost.com/dispatch/news/thomson-reuters/130423/portugal-plans-gradual-company-tax-cuts-revive-economy