* To cut tax rate to 19 pct from 31.5 pct over five years
* Seeks to broaden tax base, cut local levies
* Government says crisis made investors more cautious
(Adds finance minister on political crisis, bond plans)
By Sergio Goncalves
LISBON, July 26 Portugal's government on Friday
promised gradual cuts in corporate taxes from early 2014 to
boost investment and help the bailed-out economy overcome its
deepest recession since the 1970s.
Austerity measures under the 78 billion euro ($103 billion)
bailout have driven up the number of company bankruptcies and
pushed unemployment to record levels of around 18 percent.
"The main economic priority is the attraction of local and
foreign investment, and the reform of the corporate tax system
is crucial," said Antonio Pires de Lima, Portugal's new economy
minister, told a reporters.
Pires de Lima was appointed on Wednesday in a cabinet
reshuffle aimed at defusing tensions which had threatened
Portugal's plan to emerge from its bailout programme in
Finance Minister Maria Luis Albuquerque said the political
uncertainty had made investors more cautious about Portugal but
had not put at risk the overall goal of returning to full market
financing before June next year.
"We will need an additional effort to soothe investors now
that the crisis is overcome and the government ready to ensure
stability and determination in the reforms we had already
announced," she added.
One of those efforts is to overhaul company taxation.
The finance ministry said in a presentation the plan is to
cut the main corporate tax rate to 19 percent in the medium term
from at least 25 percent now. Additional local and state taxes
mean that in practice Portuguese companies now pay a rate of
It said 19 percent would be comparable with rates in Poland
and in the Czech Republic, "two countries with which Portugal
competes to attract investment".
The government said the reform, set be carried out over five
years, will also widen the tax base and phase out exemptions as
well as local surcharges.
It added that the draft plan had been discussed with
Lisbon's troika of lenders - the European Commission, European
Central Bank and International Monetary Fund - at the last
bailout review that ended in June.
Officials said specific proposals for the reform will be
published next week, then discussed with business groups and
($1 = 0.7555 euros)
(Writing by Andrei Khalip and Shrikesh Laxmidas, editing by
Jeremy Gaunt/Ruth Pitchford)