Brazil raises taxes, freezes spending to curb deficit

Record ID: 903613

  • Title: Brazil raises taxes, freezes spending to curb deficit
  • Date: 21st July 2017
  • Summary: RIO DE JANEIRO, BRAZIL (JULY 21, 2017) (REUTERS) PETROL STATION WORKERS ON THE JOB CAR BEING FILLED WITH PETROL MAN FILLING CAR WITH PETROL DIAL OF GAS PUMP SHOWING COST INCREASING AS CAR IS FILLED (SOUNDBITE) (Portuguese) GAS CUSTOMER MILSON DA COSTA SAYING: "I think this is a government that is extorting customers to cover their shortfall. They robbed and robbed from Petrobras and now we have to pay to cover the bills." SIGN READING "GASOLINE" CAR PULLING UP TO PETROL PUMP PETROBRAS LOGO AT PETROL STATION
  • Embargoed: 4th August 2017 21:00
  • Keywords: Brazil taxes spending budget increase of spending freeze raising of taxes budget gap
  • Location: RIO DE JANEIRO / BRASILIA, BRAZIL / MENDOZA, ARGENTINA
  • City: RIO DE JANEIRO / BRASILIA, BRAZIL / MENDOZA, ARGENTINA
  • Country: Brazil
  • Topics: Economic Events
  • Reuters ID: LVA0046QNVNLV
  • Aspect Ratio: 16:9
  • Story Text:Brazil's government on Friday (July 21) set an additional spending freeze and raised taxes to cover a budget gap this year, reinforcing its commitment to fiscal discipline but dealing a potential blow to fragile economic growth.
    According to Finance and Planning Ministries officials, the government freeze covers 5.9 billion reais ($1.9 billion) in federal spending this year. The government will also raise the federal PIS/Cofins social contribution tax on gasoline, diesel and ethanol in order to raise an estimated 10.4 billion reais in additional revenues.
    The tax hikes come after government statistics showing Brazil's annual inflation rate fell more than expected in mid-July to the lowest in 18 years. But experts don't expect the increase in prices from the tax increase to affect the government's inflation target of 4.5%.
    The country's renewed austerity effort has weighed on public investments in infrastructure and disrupted services such as passport issuance, but has been justified by President Michel Temer's year long administration as a necessary step to rebuild trust with investors and curb the growth of public debt. Brazil lost its investment-grade rating in 2015 after missing budget targets for years.
  • Copyright Holder: REUTERS
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