BRASÍLIA: Brazil’s tax collection plunged more than expected in August, frustrating economists who forecast government revenue had started to rebound along with the economy. The government collected 91.8 billion reais ($29 billion) in taxes last month, less than the 107.4 billion reais it did in July and less than the 95 billion reais expected by economists in a Bloomberg survey. All 25 economists who participated in the poll expected a stronger tax performance in August.
The continued erosion of public finances underscores the challenges of Finance Minister Henrique Meirelles days before the government expects Congress to rule on a constitutional amendment that caps spending in inflation-adjusted terms.
The central bank has said that progress on the government’s fiscal reform proposals is one of the conditions for it to start cutting the benchmark interest rate, currently at its highest level in a decade. The economy is expected to expand by 1.3 percent in 2017 after a contraction of more than 3 percent this year, according to the latest central bank survey of around 100 economists.
