!!!Brazil Senate May Approve Check Tax Increase Today, Easing Budget Deficit
Brazil Senate May Approve Check Tax Increase in Voting Today
Wed, 6 Jan 1999, 12:17pm EDT
Brasilia, Brazil, Jan. 6 (Bloomberg) -- The Brazilian senate
could approve today an increase in a check tax, a key step in
slashing the country's $64 billion budget deficit, lawmakers
said.
The first of two voting rounds in the senate could occur
today, assuming lawmakers don't present any amendments to the
bill, said Sen. Romeu Tuma, the government leader in the senate.
Voting will only go ahead if the government is confident
that it will get at least 49 votes -- or three fifths of the
upper house -- in favor of the tax increase, which would see the
tax rate almost double to 0.38 percent. The tax applies on all
financial transactions, including bank withdrawals and checks.
The approval of the check tax is essential to help the
government raise about 4 billion reais ($3.3 billion) in extra
revenue this year, part of a package of spending cuts and tax
increases aimed at raising 28 billion reais this year to help cut
by almost half the budget shortfall.
Brazil needs to slash its deficit because it's been cut off
from global capital markets as lenders have shied away from
emerging markets following Russia's debt default in August.
The approval of the measures are also a guarantee for
further disbursements of $41.5 billion in promised aid from
international lenders. Brazil has already received more than $9
billion from the International Monetary Fund and other lenders.
Once the senate approves the increase, it moves on to the
house for two votes and final approval. The Brazilian government
got a boost late Tuesday when a court overturned a ruling that
would have blocked extra payments to lawmakers for working
through a special congressional session this month. Lawmakers had
threatened not to show up to vote without the pay increases.
The government needs at least three fifths of both houses in
two voting rounds in each house -- that's 49 votes in the senate
and 308 in the lower house -- to approve the increase in the
check tax. Final approval of the tax increase is expected by
March.
The check tax, implemented by the government as a temporary
measure in 1996, expires Jan. 23. The government introduced 6.7
billion reais in taxes and other revenue measures last week to
make up for the shortfall until the new tax rate is approved and
collection resumes, likely in July. The tax goes into effect 90
days after it becomes law.
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