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Temer Administration Eliminates Fiscal Benefits for Companies and Blocks US$ 13.5 Billion

03/30/2017 - 13h29

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FROM BRASILIA

On Wednesday, March 29, the Brazilian government announced a block of R$ 42.1 billion (US$ 13.5 billion) in the country's budget and a forecasted extra revenues of R$ 16.1 billion (US$ 5.1 billion) to make ends meet in 2017 without increasing the expected deficit even more.

To increase revenues, Finance Minister, Henrique Meirelles, said that the government will eliminate the tax relief on payrolls of various sectors of the country's economy.

With the measure, federal coffers are likely to receive R$ 4.8 billion (US$ 1.5 billion) by December in addition to that forecasted in the budget.

Another R$ 10.1 billion (US$ 3.2 billion) are likely to come from hydroelectric power plant concessions returned to the government.

And another R$ 1.2 billion (US$ 384 million) will be collected with the IOF (Tax on Financial Transactions) on credit cooperatives, which did not pay the tribute before.

The government was looking into the possibility of ending tax reliefs for all sectors of the economy, however, the pressure made by businessmen and the fear of the impact on inflation made the economic team spare some sectors.

Minister Meirelles says that the sectors of road, underground and rail passenger transportation as well as civil and infrastructure construction and the communication sectors will not be included. Meirelles justified his decision with the argument that these segments "generate much labor."

President Temer's decision to end tax reliefs on payrolls ends one of the main marks of the economic policy of the Dilma Rousseff administration.

Translated by THOMAS MUELLO

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