Influential Brazilian politician opposes tax rise
Reuters, Wednesday, November 11, 1998 at 17:50
BRASILIA, Nov 11 (Reuters) - An influential Brazilian
politician defeated in recent state elections said Wednesday he
would instruct his party to vote against a financial
transactions tax increase included in a sweeping fiscal
austerity plan.
The government has suggested raising the tax, known as the
CPMF, to 0.38 percent from 0.20 percent as part of a three-year
plan to save or raise $84 billion and redress a chronic
imbalance in Brazil's financial books.
"I will recommend that members of the PPB (Brazilian
Progressive Party) vote against the increase in the CPMF," said
PPB President Paulo Maluf, who narrowly failed in his bid to
become governor of economically powerful Sao Paulo state.
Analysts say Congress must urgently approve the fiscal
measures to bring Latin America's biggest economy back from the
edge of a financial abyss.
The International Monetary Fund was expected to announce
this week a multibillion-dollar credit line to restore investor
confidence in Brazil's battered economy and shore up the local
currency, the real.
Analysts had predicted that Maluf might oppose some of the
fiscal austerity measures after he lost the October election to
incumbent governor Mario Covas, a close friend and ally of
President Fernando Henrique Cardoso.
Maluf, a former mayor of Sao Paulo, was said to be upset
about Cardoso's out-and-out support for Covas.
Although Maluf's backing for Cardoso has never been
unconditional, his influence over the PPB, the fourth biggest
party in the lower house of Congress, has been essential to the
government's attempts at approving reforms.
The Chamber of Deputies last week passed a long-delayed
bill to plug huge losses in the pension system, in what was
seen as a key indicator of the government's ability to push
through unpopular measures contained in its fiscal plan.
joelle.diderich@reuters.com))
Copyright 1998, Reuters News Service |
