LISBON, March 21 Portugal is preparing to launch
an industry support programme involving tax incentives for firms
to pull the bailed out country out of its worst recession since
The strategy will focus on financing for enterprises and
will use competitively low corporate tax rates to support
investment, economy minister Alvaro Santos Pereira told
parliament on Thursday.
"The economic policy will zero in on establishing strong
investment incentives, be it via fiscal credits to attract
investment or a significant bet on our fiscal competitiveness,"
he said, without giving details of proposed tax rates.
Last month, the minister said Lisbon floated plans to its
international lenders to cut its corporate tax rate to one of
the lowest levels in Europe for new projects. He has defended
lowering the rate to 10 percent from 25.
Lenders from the European Union and IMF are studying, with
the government, a fiscal reform that is likely to include a
lower corporate tax in some form after bailout austerity, that
involved many heavy tax hikes and left the economy reeling.
The government had already approved 700 million euros ($905
million) in financing for small and medium-sized firms this
year, Santos Pereira said, with another 1.3 billion euros to be
distributed under a special growth programme.
Last week, the lenders eased Lisbon's budget goals and gave
it more time to make unpopular spending cuts. Gross domestic
product is expected to drop 2.3 percent this year after last
year's 3.2 percent.
The minister reiterated that the country cannot abandon its
general course aimed at putting it public finances in order and
diminishing debt and "it is fundamental to combine budget
consolidation with the strategy of stimulating economic growth."
Still, he called on Europe to "become more friendly to
investment" and not just austerity.
"If Europe really wants to avoid a decline, to regain growth
it once had, then Europe has to change, and Portugal with it."
Finance Minister Vitor Gaspar said on Tuesday Lisbon's
return to the bond markets in January after its mid-2011 bailout
has started to reverse a crippling lack of financing for the
economy although the loans are yet to trickle down to smaller
companies. ($1 = 0.7737 euros)
(Reporting By Filipa Lima and Andrei Khalip; editing by Ron