Bailed-out Portugal hikes more taxes to cut debt

LISBON, Portugal (AP) — Portugal is tightening its belt another notch, with the government announcing steep income tax hikes to reduce the bailed-out country's debt load despite mounting discontent over austerity measures.

Finance Minister Vitor Gaspar said an "enormous increase in taxes" next year was aimed at meeting the deficit target of 4.5 percent, even as the country remains mired in recession.

He told a news conference Wednesday the government is cutting tax brackets to five from eight in 2013, raising most income taxes, and will also levy a tax surcharge of 4 percent on wages.

He said the government also intends to raise taxes on capital gains, assets, financial transactions, tobacco and luxury goods.

Gaspar said the country is "at a moment of financial crisis and social emergency"