- Title: Brazil raises taxes, freezes spending to curb deficit
- Date: 21st July 2017
- Summary: RIO DE JANEIRO, BRAZIL (JULY 21, 2017) (REUTERS) VARIOUS OF CARS DRIVING ON THE STREETS GENERAL VIEW OF PETROL STATION PETROL PRICES ON DISPLAY MAN WALKING INTO FGV (GETULIO VARGAS FOUNDATION) BUSINESS SCHOOL FGV LOGO ON BUILDING ECONOMIC ANALYST FROM THE FGV (GETULIO VARGAS FOUNDATION) BUSINESS SCHOOL, ANDRE BRAZ, SPEAKING IN HIS OFFICE BRAZ SPEAKING TO COLLEAGUE (SOUNDBITE) (Portuguese) ECONOMIC ANALYST FROM THE FGV (GETULIO VARGAS FOUNDATION) BUSINESS SCHOOL, SAYING: "Besides having an impact on the cost of living of families, in the medium and long term it could also impact on the price of bus tickets because of diesel demand, the price of freights and everything else. This will not jeopardise the downward trend on inflation. We will end 2017 with a much lower inflation rate than last year." CAR BEING FILLED UP WITH GAS GAS PUMP DISPLAYING COST OF FUEL AS CAR IS FILLED PERSON RETURNING GAS NOZZLE TO PUMP
- 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: LVA0026QNVNLV
- 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.
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