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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Bob Howarth who wrote (12008)	1/19/1999 3:47:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Senate OKs CPMF Extension, Hike In 2nd Round Vote Dow Jones Newswires BRASILIA -- The Brazilian Senate overwhelmingly approved a measure Tuesday to extend and increase the CPMF tax on financial transactions for the next three years. The widely expected government victory, by a margin of 64 to 12, clears the path for the CPMF proposal to move to the lower house, or Chamber of Deputies, where it must go through two votes. The approval Tuesday is a first win for President Fernando Henrique Cardoso in what is considered the start of a crucial two weeks in Congress following government moves to alter a long-standing exchange policy and effectively hike interest rates in recent days. The CPMF is a key component of the government fiscal plan that formed the backbone of an agreement with international lenders for $41.5 billion in aid. The Senate had already approved the tax hike and extension in a first reading on Jan. 6 with a 61-to-19 majority. According to the government proposal, the controversial tax - charged on all banking operations - will be increased to 0.38% from the current 0.20% for the next 12 months, after which the rate will drop to 0.30% for the years 2000 and 2001. Current CPMF revenues run out Jan. 21 and the delay in the approval of its extension and increase is expected to have cost the government 6.7 billion reals (BRR) ($1=BRR1.56) in lost income this year. The government announced a package of measures in late December to help compensate for these losses, the bulk of which were approved by a joint session of Congress last week. Once transferred to the lower house, the CPMF will first be examined by the Constitution and Justice Committee, which will make recommendations on whether or not the full Chamber should endorse the Senate's decision. Then the proposal goes to a specially created CPMF Committee, where amendments to the draft can be filed. Only then will the text go the lower house plenum for two rounds of voting before it is approved in a final form, which analysts and government officials expect will occur by March. After getting final approval, another 90 days must pass before the new law can be implemented. -By William Vanvolsem; (5561) 244 3095; wvanvolsem@ap.org