August 24, 2017 / 9:23 PM / a year ago

Brazil's farm lobby to demand broader tax renegotiation program

BRASILIA (Reuters) - Brazil’s powerful agricultural lobby will insist on greater farmer benefits in a tax renegotiation program, the head of the congressional farm caucus told Reuters on Thursday, defying opposition from the Finance Ministry amid a budget crisis.

Brazil's Finance Minister Henrique Meirelles talks to the audience during the Brazilian Steel Conference in Brasilia, Brazil August 23, 2017. REUTERS/Adriano Machado

Members of the rural caucus on Wednesday secured key posts on a congressional committee responsible for analyzing the program, created through a decree by President Michel Temer after talks between farmers and policymakers, including Finance Minister Henrique Meirelles.

Although the Finance Ministry told Reuters on Thursday that it opposed changes to the decree, the leader of the rural caucus, Nilson Leitão, said legislators will alter the rules.

“Now that the decree is out, we will decide how we want it to look and then we will ask the government if there is anything they do not want in there,” said Leitão, a lawmaker representing Temer’s largest ally, the Brazilian Social Democracy Party.

The rural caucus is considered the most influential interest group in Brazil’s Congress, gaining strength in recent years as farm output boomed in an economic slump. Its power brokers were key in saving Temer from recent corruption charges.

“We don’t think it will be hard to convince them about the changes that we want to make,” added Leitão, also the deputy chairman of the joint congressional committee.

The showdown between Temer’s powerful finance minister and key allies in Congress highlights the struggle to implement austerity measures to close Brazil’s budget gap.

Despite recent victories such as the preliminary approval of a new benchmark rate for long-term lending, Temer has faced stiff opposition to raising taxes or cutting benefits to powerful interest groups.

The farm program in committee, known as Funrural, will allow producers to pay social security debts in monthly installments with a 4 percent down payment. The 745 proposed amendments include reducing the down payment to 1 percent and extending the deadline to apply for benefits.

The Finance Ministry press office did not have estimates for the potential budget impact of the changes, saying it had to wait for a new version of the program from the committee.

The Planning Ministry said the government expected to raise nearly 700 million reais ($222.40 million) a year from the tax payments.

A separate tax amnesty proposal known as Refis was also substantially changed, reducing the estimated revenue to less than 1 billion reais from 13 billion reais originally.

Reporting by Silvio Cascione; Editing by Brad Haynes and Dan Grebler

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