Portugal Says 2012 Tax Revenue Drops 6.1%, Spending Falls 2.1%

Portugal’s Finance Ministry said tax revenue dropped 6.1 percent in 2012 as the economy contracted and disposable income fell.

Based on comparable figures, revenue from indirect taxes declined 3.7 percent from 2011 and revenue from direct taxes fell 9.4 percent, the Finance Ministry’s budget office said last night in a report on its website. Spending fell 2.1 percent, with personnel costs dropping 18 percent.

The government aimed for a 2012 budget gap equal to 5 percent of gross domestic product to comply with the terms of the aid package. The Finance Ministry last night posted a preliminary full-year deficit for the general government of 5 percent of GDP, beating a 5.4 percent target in the bailout program.

Portugal last year was given more time to narrow its budget deficit after tax revenue missed forecasts and the economy heads for a third year of contraction in 2013. It aims for a deficit of 4.5 percent in 2013 rather than 3 percent. It will only cut the deficit below the European Union’s 3 percent limit in 2014, when it targets a 2.5 percent gap.

Before it's here, it's on the Bloomberg Terminal.