Portugal steps up austerity with hefty tax hikes

Portugal’s government is taking the bailed-out country deeper into austerity, announcing sharp tax increases for next year.

The draft budget for 2013 is one of the harshest in the country’s recent history and will take away the equivalent of a month’s wages from many workers.

The government says the measures are needed to cut the national debt as Portugal strives to restore its financial health. More than a decade of meagre growth compelled Portugal to ask for a €78bn rescue last year to avert bankruptcy.