Portugal austerity: Parliament approves tax-rise budget

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Media captionCampaigners say they did not spend more than they had, so why should they pay for the debt?

Portugal's parliament has backed an austerity budget that includes huge tax rises in a bid to reduce the deficit.

The bill, which faces a final vote on 27 November, proposes a new tax on financial transactions and massive rises in property and income taxes.

Hundreds of protesters angry about the government's austerity programme gathered outside parliament.

The government says the measures are needed to fulfil the terms of a bailout worth 78bn euros (£63bn; $101bn).

The European Union and International Monetary Fund demanded severe spending cuts as part of the bailout package agreed in May 2011.

MPs from the governing coalition, which controls 132 seats in the 230-seat parliament, voted to approve the 2013 budget.

The bill passed despite MPs from the main opposition Socialists voting against it.

However, the bill could face legal challenges after a judges' union suggested it might break constitutional rules.

Portugal has already cut public sector wages and raised taxes, triggering a series of street demonstrations.

Analysts say the measures have proved painful for many people, with public sector workers hit particularly hard.

Civil servants were among hundreds of people who gathered outside parliament to protest shortly after the budget vote was held.

According to the latest EU data, unemployment stands at a record 15.7%, up from 13.1% a year ago.

Only Spain, Greece and Latvia have higher unemployment rates in the eurozone.

Also, many workers have faced steep reductions in their incomes.

In July, a government proposal to limit extra holiday and Christmas pay for public sector workers was thrown out by the constitutional court.

However, the EU and IMF have praised Portugal for the steps it has taken so far.