BRASILIA: Brazil’s government may have to increase tax collection if spending cuts fail to slow inflation and boost growth, Finance Minister Joaquim Levy said.
We will probably need to think about re-balancing some taxes, because some of them were reduced a while ago,” Levy wrote in a question and answer session on Facebook on Friday. “That revenue is now needed.”
President Dilma Rousseff pledged to control spending and contain inflation after billions in tax cuts and subsidised credit failed to boost growth in her first term. Since winning re-election in October by the narrowest margin since at least 1945, she has capped monthly spending, cut pension and labour benefits and raised interest rates on loans from state development bank BNDES.
The government’s objective is to increase the primary budget surplus target, which excludes interest payments, to 1.2 per cent of gross domestic product this year from a deficit of 0.2pc in the 12 months through November. Possible tax measures would be taken cautiously and only after other possibilities have been explored, Levy wrote.
While inflationary pressure will rise in January due to seasonal increases of education, transportation and other costs, budget adjustments will help slow inflation next year, according to the minister, who replaced Guido Mantega this month.
