For budget cuts and tax increases to work, they depend on a key concept to work - elasticity. The proportion of the effect of those measures in Consumption / Demand of goods and services in the economy. And, though the first signs were actually encouraging, it seems Consumption elasticity on the austerity measures taken by Portugal has now failed us, leading to weaker tax income for the State. But the point is that a tax increase like the one that has just been announced will only depress it further. It is the wrong measure. Government has not followed my advise of further cuts in unproductive expenses - and we will all pay for that.
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