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Strategies & Market Trends : Telebras (TBH) & Brazil

TBH 0.690

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To: Steve Fancy who wrote (11270)	1/7/1999 12:27:00 AM
From: Steve Fancy	of 22640

Senate Hands Brazil's Government A 1st-Round Victory With Tax Vote Dow Jones Newswires January 7, 1999 BRASILIA -- The Brazilian Senate Wednesday approved by 61 votes to 19 the first reading of the extension and increase of the CPMF financial transactions tax for the next three years. The measure -- calculated to save the government 15 billion reals ($13.39 billion) in 1999 -- is considered a key measure of the government's fiscal stability plan and directly linked to the $41 billion international aid package for Brazil. The move was well received on the Sao Paulo Stock Exchange. The Bovespa Index surge 220 points, or 3.1%, to 7330 Wednesday. Senate Chairman Antonio Carlos Magalhaes announced after the vote that the second-round vote in the upper house will be held Jan. 19, after which the proposal will go to the Chamber of Deputies for another two voting rounds. The first-round government victory in the Senate is the first decision by Congress in the legislature's extraordinary session this January, a time when parliament is normally in recess for the Brazilian summer holidays. The constitutional amendment seeks to extend the CPMF tax -- which expires as a temporary levy Jan. 23 -- to the year 2001, simultaneously increasing its rate to 0.38% from the current 0.20% for the next 12 months, and then lowering it to 0.30% in 2000 and 2001. The CPMF, charged on all banking transactions, was first introduced two years ago and aims to raise funds to finance health services. Opposition legislators claim the revenue isn't used for its original purpose but rather for stopgap budget shortcomings as a whole. Because of Congress' failure to approve the amendment last year, the government announced a "mini-package" at the beginning of this month, including new tax raises to offset the estimated 5.4 billion reals of lost revenue due to the delay of the CPMF approval. New taxes in Brazil only become effective 90 days after their approval by Congress.

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