Due to Truck Drivers, Brazilian Federal Government and States Collect US$ 618 Million Less

07/20/2018 - 12h16

The truckers' strike - which took place in May - may have negatively affected Brazil's finances on two separate levels. Not only has the strike raised the deficit via concessions the government made to the trucking sector, it has also diminished the revenues collected in terms of both federal and state taxes.

Preliminary estimates suggest that the public sector has let go of R$ 2.4 billion (US$ 618 million) in revenues, most of which had been destined to go to states.

Even though the truckers' strike took place in May, its effects on government revenues only appeared in June due to the fact that the generation of taxable funds occurs one month prior to tax payments.

Definitive data on the month of June will only become available at the end of July, after Brazil's Internal Revenue Service releases a report on the matter.

However, based on the data at hand, when compared to the same period of 2017, the collection of federal taxes managed by the country's Internal Revenue Service (which, for example, does not include petroleum royalties) has decreased by around 0.4% in the month of June - a rate that already takes inflation into account. This was the first time in 2018 that government spending surpassed tax revenues.

"The truckers' strike has shocked the trade and services sectors and it is expected that the impacts will be greater on the ICMS and ISS [taxes]," said Vilma Pinto, a researcher at Ibre/FGV. She also pointed out that other economic factors may have contributed to the negative result.

In light of the fact that Brazil's congress is calling for more spending at a time when states are dealing with a shortage in resources to invest in healthcare, security and education, many economists maintain that the data is alarming, especially if the numbers don't simply reflect a temporary phenomenon.

Translated by THOMAS MATHEWSON

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