Economy Minister Alvaro Santos Pereira said that Portugal's government plans to lower company tax rates "significantly" as part of a wider plan of incentives to drag the economy out of the recession.
He also promised to step up the financing of the economy by state-owned bank CGD that will provide €1 billion this year and €2.5 billion in 2014, and later to create a development bank to boost such funding further, especially for exports-orientated small and medium-sized companies. "We want more investment and the main instrument here is the reform of the company tax that we intend to carry out via a significant decrease in tax rates to make investment more attractive", Santos Pereira said.
Santos Pereira said the plan should lift the share of exports in its gross domestic product to 50 per cent by 2020 from this year's estimated 40 per cent. Despite the recession, exports of goods and services have been rising in the last two years, making up one of the few bright spots in the Portuguese economy.
Santos Pereira has previously suggested that the company tax rate could be lowered to around 10 per cent for companies carrying out new productive investment. Such a cut would make the rate one of the most competitive in Europe, but it would also have to be agreed with Brussels.
The coalition government has a comfortable majority in parliament, but Lisbon's lenders want broader support to give the reforms a better chance of long-term success. The Socialists have so far ruled out any consensus unless the government abandons new spending cut plans.
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