Brazil mulls tax hikes of $4.6 billion to meet fiscal goal

President Michel Temer still has to decide on the proposal after meeting with Finance Minister Henrique Meirelles later on Monday.
President Michel Temer still has to decide on the proposal after meeting with Finance Minister Henrique Meirelles later on Monday. PHOTO: AFP

BRAZIL (REUTERS) - The Brazilian government is considering 14 billion reais (S$6.4 billion) in tax increases and a spending freeze of 30 billion reais for this year to meet its key fiscal savings goal, a government source said on Monday (March 27).

The government also plans to raise another 14 billions reais in asset sales to cover a gap of 58 billion reais in this year's primary budget deficit target, a key gauge of the country's capacity to repay its debt. The government has a primary deficit goal of 139 billion reais in 2017.

President Michel Temer still has to decide on the proposal after meeting with Finance Minister Henrique Meirelles later on Monday. The official announcement is expected for Tuesday, said the official who asked for anonymity because the matter is not public yet.

The source said the government could increase the Pis/Cofins social security levies charged on almost all goods and services sold in Brazil. The government could also eliminate a series of payroll tax breaks and hike the IOF financial transactions tax.

Temer and his allies in Congress have opposed tax increases out of fear that higher duties could hurt an economy still reeling from the country's worst recession in a century.