Brazil Considers Raising Taxes Without Lawmaker Approval, Sources Indicate

By Bernardo Caram

BRASILIA – Brazil’s government is considering tax increases that can be enacted without congressional approval to address this year’s budget deficit, according to two sources from the finance ministry. Officials have indicated that new revenue measures may be on the horizon.

Potential tax increases may include changes to the levy on financial transactions (IOF) as well as adjustments to import and export taxes, all of which can be modified through a presidential decree.

Recently, the Treasury presented a plan for implementing new revenue measures if necessary, to meet the fiscal objective of eliminating the primary deficit for the year. These measures could be incorporated into the bimonthly revenue and expenditure report set for release later this month.

In July, the government froze 15 billion reais (approximately $2.68 billion) in federal spending to achieve its fiscal goals. An updated assessment of federal finances is scheduled for September 20.

To complete its evaluation, the Finance Ministry is awaiting the approval of legislation that includes measures to offset the costs of payroll tax exemptions passed by Congress. Proposed measures consist of obtaining resources from judicial deposits, collecting funds from dormant bank accounts, and repatriating assets held overseas.

One source mentioned that even if these measures are approved, their implementation will not be simple, as it will involve the establishment of new regulations and programs.

Current exchange rate: $1 = 5.5988 reais.