Brazil’s government has increased tax rates on corporate financial revenue in a move to narrow a wider-than-expected budget deficit and offset delays in Congress to approve cost-cutting measures.
The total tax rate of 4.65 percent will be effective from July 1, according to a statement from the government’s tax agency. The levy, which will be paid by 80,000 companies, will raise 2.7 billion reais ($860 million) in 2015 and 6.5 billion reais next year, according to the tax agency. The previous tax level was zero.
The administration of President Dilma Rousseff is struggling to get a divided Congress to approve a series of tax increases and spending cuts on labor and pension benefits. Rousseff said in an interview on Tuesday she would do whatever is necessary to achieve the budget target.
The government’s objective is to boost a primary budget surplus target, which excludes interest payments, to 1.2 percent of gross domestic product this year from a deficit of 0.64 percent last year.
Brazil posted a primary budget deficit of 2.3 billion reais in February, which compares with a 21.1 billion-real surplus in January and an economists’ forecast for a 2 billion reais surplus.