Brussels, 16/10/2012 (Agence Europe) - Portugal has no room for manœuvre and must continue the austerity drive next year with tax rises across the board, said Portuguese finance minister Vitor Gaspar, as he unveiled the country's draft budget for 2013. Against the backdrop of protest demonstrations in the country, he said next year's budget would be difficult for the Portuguese because taxes would rise very sharply. The new tax rises will replace the highly controversial increases in workers' national insurance contributions and reductions in employers' national insurance. The number of tax bands will be reduced from eight to five; a special 4% tax is being introduced along with a solidarity tax of 2.5% for the highest earners. The average rate of taxation on income will rise from 9.8% this year to 13.2% next year in order to raise more than €4.3 billion, Gaspar explained. The draft budget for 2013 also includes €1 billion of spending cuts with cuts in welfare and pensions of over €1350 and a 2% cut in the number of civil service. Portugal has to reduce its budget deficit to 5% of GDP in 2012 and 4.5% in 2013. Last week, Eurogroup released the next instalment of aid for Portugal, €4.3 billion (see EUROPE 10706). (SP/transl.fl)