Brazil’s Government Has Worst August Revenues in 7 Years

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Brazil’s federal government obtained R$91.8 billion in taxes and contributions in August 2016, more than 10.1 percent less than during the same period last year, and the worst result since August of 2009, according to the country’s Federal Revenue Service. Nonetheless, government officials discard the possibility of an increase in taxes.

For the accumulated total of the year, from January through August, federal revenues totaled R$816.188 billion, down by 7.45 percent compared to the first eight months of the year. This is the worst January to August result since 2010.

With the weak economy, there is an increase in unemployment and a decline in sales of goods and services. Consequently, individuals and companies are paying fewer taxes.

According to data from the Internal Revenue Service, in August 2016, industrial production fell by 6.6 percent while sales of goods and services declined by 10.17 percent.

Despite the negative results, Finance Minister, Henrique Meirelles says there is no possibility of tax increases for this year. According to Meirelles, forecasts made by the government took into account a decline in revenues but that the administration believes that these will start to increase as the country’s economic scenario improves.

“What we see now is the result of very strong recession faced by Brazil at the end of 2014. We are facing the strongest recession in the country’s history as a result of the economic policy of recent years. As this is corrected, activity stabilizes and begins to show results,” Meirelles was quoted as saying by Agencia Brasil at an event in São Paulo on Thursday (September 29th).

He noted that the government’s priority now is to control the decline of the economy, stabilizing it so that investments can be restarted and jobs can be once again created. “Expectations about the economy are already improving in all sectors as is the confidence index. Activity is increasing in some sectors already,” he added.