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By Tarek Amara
TUNIS, Dec 10 (Reuters) - Tunisia's parliament on Saturday approved a 32.7 billion dinar ($14.1 billion) budget for next year, including deficit cutting measures that had been watered down under pressure from unions.
From a total of 217 lawmakers in parliament, 122 voted in favour of the finance bill. Earlier this week parliament struck out two key revenue raising measures and the government partially reversed plans to freeze public sector pay.
Prime Minister Youssef Chahed told parliament after Saturday's vote that the budget had been agreed on by "consensus", adding that it still included "several important fiscal decisions that will help public finances in 2017".
Tunisia's powerful UGTT union had called off a public sector general strike after reaching a compromise deal with the government on wages, and lawyers halted a campaign of industrial action when parliament rejected taxes on legal cases presented to court.
Proposed taxes on pharmacists were also dropped after the threat of a strike.
"This budget overturned the expectations of those who thought there would be clashes with the UGTT and the lawyers," Chahed said.
Among the key measures, he said, was the first revision of employee tax rates since 1989, which he said would "allow for more fiscal equality among employees".
The budget also includes a 7.5 percent increase in company taxes, a freeze on public sector recruitment outside the security forces, and fiscal rules to try to reduce tax evasion amongst liberal professions.
The budget forecast growth at 2.5 percent and the budget deficit narrowing slightly to 5.4 percent.
Tunisia has been widely praised for its democratic transition since its 2011 uprising, but the North African country's economy has struggled because of labour unrest, militant threats and a lack of reform.
Unemployment is high, especially among the young, and some inland regions remain impoverished. International lenders have demanded reforms to cut the deficit and reduce spending on a bloated public sector.
In front of parliament on Saturday, hundreds of young Tunisians from the country's marginalised interior held a protest, chanting slogans to demand jobs and development.
($1 = 2.3155 Tunisian dinars)
(Writing by Aidan Lewis, editing by David Evans) ((Aidan.Lewis@thomsonreuters.com ; +216-29850352;))