Brazil’s Tax Hike Considerations

By Bernardo Caram

BRASILIA (Reuters) – Brazil’s government is contemplating tax increases that do not necessitate congressional approval to balance this year’s budget, as confirmed by two finance ministry sources on Friday. Officials acknowledged that new revenue measures could be implemented.

Potential tax adjustments may target:
– Financial Transaction Tax (IOF)
– Import and Export Taxes

These can be modified through presidential decree.

On Thursday, the Treasury introduced a plan for additional revenue measures as needed to meet the fiscal target of eliminating the primary deficit for the year. These potential measures could appear in the bimonthly revenue and expenditure report scheduled for later this month.

In July, the government had to freeze 15 billion reais ($2.68 billion) in federal expenditures to adhere to fiscal objectives. A reassessment of federal accounts is expected to be presented on Sept. 20.

The Finance Ministry awaits the approval of a bill that will provide compensatory measures for significant payroll tax waivers previously ratified by Congress. These measures involve:
– Securing resources from judicial deposits
– Collecting dormant bank account funds
– Repatriating overseas assets

One source mentioned that even with the approval of these measures, the implementation process will be complex, requiring new regulations and programs.

($1 = 5.5988 reais)