Sept 29 (Reuters) - The Portuguese government proposed a range of new austerity measures for 2011 on Wednesday in order to cut the budget deficit to 4.6 percent as promised to the European Union.
Some measures were also announced for 2010.
SPENDING
The measures are expected to save 3.4 billion euros ($4.63 billion), or 2 percentage points of gross domestic product, next year. They include:
* Civil servants' wages to be cut by 5 percent. The reduced salaries will remain in force after 2011.
* Pensions in the public sector to be frozen.
* Promotions and pay rises in the public service frozen.
* National Health Service costs with medicines and diagnostics to be reduced.
* Transfers of state funds for education, local administrations to be reduced.
* Expenditure on state auto fleet to be cut by 20 percent.
TAXES
On the revenue side, the measures would add 1.7 billion euros to state coffers, or one percentage point of gross domestic product. They include:
* A two percentage point rise in value-added tax to 23 percent maximum rate.
* A new tax on financial system in line with EU initiatives.
* Revision of fiscal benefits for companies.
2010 MEASURES
* The government is in talks with Portugal Telecom
* The government also said it will freeze all public investment this year from now.
* The government said some of the measures from the 2011 draft budget will be applied still this year to help meet the budget deficit goal of 7.3 percent of GDP. These measures include spending cuts on healthcare and cuts in investment costs. (Reporting by Andrei Khalip)