09/07/2024 – 7:53
The Finance Ministry is considering raising taxes that do not require approval from the National Congress in order to be adjusted and allow for immediate entry into force if it finds it necessary to increase revenue to balance this year’s accounts, two sources at the ministry told Reuters.
The additional measure, according to sources, may be presented together with the bimonthly revenue and expenditure report, which will indicate this month whether the government needs to increase revenue collection to meet the target of a zero primary deficit in 2024, which has a tolerance band of 0.25 percentage points of GDP.
+Government accounts have a deficit of R$9.28 billion in July, worse than expected
“We have to think of something that has a direct impact, that doesn’t have to be annual, ninety-day or (need) approval from Congress, something extra-fiscal,” said one of the authorities, speaking on condition of anonymity because the discussions are not public.
Taxes that fall into this category include the Tax on Financial Transactions (IOF), Import Tax and Export Tax, which can be increased by means of a presidential decree.
Deficit in public accounts
The economic team had already announced this week that it is ready to present additional collection measures in the event of revenue shortfalls, citing lower-than-expected gains from the actions of the Administrative Council for Tax Appeals (Carf).
In July, the government froze 15 billion reais in ministry funds in order to comply with fiscal rules. The new assessment of federal accounts will be presented on September 20.
To conclude the assessment, the Treasury is awaiting approval of the bill that brings compensatory measures for the payroll tax relief, such as raising funds from judicial deposits, collecting money forgotten in bank accounts and repatriating assets abroad.
The source highlighted that even with the approval of the measures, the implementation process will not be simple, requiring the publication of regulations, notices and new programs, in addition to action by the Attorney General’s Office.
Market analysts continue to doubt the government’s ability to achieve the zero fiscal target, with the Central Bank’s Focus bulletin projecting a deficit of 0.60% of GDP this year.
The economic team, although recognizing that the scenario is challenging, has preached that the objective will be pursued at all costs, said the source.
“To close the fiscal year this year we are going to make a big effort, we are not giving up,” he said.
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