BRASILIA (Reuters) - Brazilian President Michel Temer is resisting calls from his economic team to implement hefty tax hikes to meet the government’s fiscal deficit goal this year, an official familiar with the matter said on Monday.
Temer’s economic team, led by Finance Minister Henrique Meirelles, has proposed 14 billion reais ($4.6 billion) in tax increases and a spending freeze of 30 billion reais, a second government official said on Monday.
The official, who asked not to be named because he was not allowed to speak publicly, said Temer has agreed to raise the Pis/Cofins social security levies, but disagrees with hiking other duties.
Meirelles is considering hiking the IOF financial transactions tax on specific operations as well raising the CIDE fuel tax. He also said the government could roll back a series of payroll tax breaks.
Temer’s office did not immediately respond to requests for comment.
The government expects to raise an extra 17 billions reais from the sale of hydroelectric plants and cancellation of old debts to cover a gap of 58 billion reais in this year’s primary budget deficit target, a key gauge of the country’s capacity to repay its debt. The government has a primary deficit goal of 139 billion reais in 2017.
Temer and his allies in Congress have opposed tax increases out of fear that higher duties could hurt an economy still reeling from the country’s worst recession in a century.
Writing by Alonso Soto; Editing by Mary Milliken