The Portuguese government approved new cuts in pensions and tax increase for 2015 Thursday in a bid to reach its deficit target after three years of austerity.
Finance Minister Maria Luis Albuquerque told a press conference that a "sustainability contribution" tax ranging between 2.5 percent and 3.5 percent will be levied on pensions to those with a monthly salary of over 1,000 euros (1,387.5 U.S. dollars).
The government also raises VAT from 23 percent to 23.25 percent, and the proportion of personal social security spending from 11 percent to 11.2 percent, which, in together, will save the government an additional 250 million euros (347 million U.S. dollars) next year.
The new cuts came after the country's Constitutional Court earlier voided some austerity measures including cuts in public employees' pay and income tax on unemployment and sickness.
The Portuguese government has been cutting spending and implementing tax hikes since it received a 78-billion-euro (108-billion-U.S. dollar) bailout from the European Union and the International Monetary Fund (IMF) in May 2011. Portugal exited the bailout program in May, but as requested, Lisbon should cut its deficit to 4 percent of GDP this year.
The cuts drew criticism from opposition parties, who stressed that too much austerity would choke the economy.
"Poverty continues to be the government's priority," Mariana Aiveca from the Left Block said on Thursday after a council of ministers meeting.
"This means more cuts, that the government can't manage to govern without attacking salaries and pensions, without attacking working rights and the rights of our citizens," said Aiveca.
Antonio Gameiro, from the Socialist Party, said the country has seen "more and more cuts" and it is time for the president to "hear society and decide on the future of the Portuguese."
However, parliamentary leader of the ruling Social Democratic Party Luis Montenegro defended the government's latest measures and accused the Socialists of sparking "fear and doubt."
"This is merely down to bad faith by the Socialist Party, the disorientation and a new attempt to create fear," he said.