- Advertisement -

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The Brazilian government’s new economic team announced the first measures which they hope will reduce the country’s primary deficit and put the economy back into the path of sustainable growth. Finance Minister, Joaquim Levy, announced on Monday, the government will increase taxes on fuels, imports and financial operations, with the goal of obtaining an extra R$20.6 billion in revenues.

Brazil's new Finance Minister, Joaquim Levy, announces measures to increase federal revenues, São Paulo, Brazil
Brazil’s new Finance Minister, Joaquim Levy, announces measures to increase federal revenues, photo by Wilson Dias/Agencia Brasil.

“We are taking a series of actions to re-balance public accounts with the objective of increasing the confidence and understanding of economic agents, so that the economy can recover under new conditions,” said Levy to reporters as he announced the measures.

According to the Minister the hike in taxes in fuels will mean an increase of R$0.22 per liter in gasoline and R$0.15 per liter in diesel prices at distributors. The increase will generate an extra R$12.2 billion in revenues this year alone.

The government also decided to increase PIS and Confins taxes (social integration and social security taxes payed by companies) on imports from 9.25 percent to 11.75 percent. According to Levy the measure is to counteract the courts’ decision to exempt imports from federal sales taxes.

In regards to the Imposto sobre Operações Financeiras – IOF (Tax over Financial Operations) taxes for consumers trying to obtain credit will increase from 1.5 percent to 3 percent per year. Levy said that his economic team is trying to adjust public accounts with ‘the least possible sacrifice’ and that the measures will tend to lower the long-term interest rate curve.

“The world has changed, and Brazil is changing,” said Levy. “We are taking actions to reach, in the best manner possible, what is necessary to obtain the path to growth.”

For this year the government has established a primary surplus of 1.2 percent of GDP, equivalent to R$66.3 billion for the federal, state and municipal governments as well as state-owned companies.

- Advertisement -

8 COMMENTS

  1. Again Brazil will increase the taxes designed to hit their middle class. No mention of infrastructure improvements or what they are going to do with the increase in tax monies. Seems like Brazil is stuck in a vicious cycle of taxing, talking big improvements, and showing nothing.

  2. Mr. Levy’s implementation of a “Chicago”line of economics goes against Ms. Dilma Rouseff’s grain. She is a Bolivarian believer and her heroes are Fidel Castro, Che Guevara and Chavez. She put Mr. Levy in office to appease the world of economics. The consensus is either Mr. Levy goes or she does….it a matter of time.

LEAVE A REPLY