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UPDATE 1-Brazil reinstates IOF tax on state bank BNDES loans
September 1, 2015 / 3:28 PM / 2 years ago

UPDATE 1-Brazil reinstates IOF tax on state bank BNDES loans

(Adds IOF tax percentage, revenues estimates and background throughout)

BRASILIA/SAO PAULO, Sept 1 (Reuters) - The Brazilian government on Tuesday reinstated a 1.5 percent financial transaction tax on loans from state development bank BNDES , part of efforts to discourage subsidized lending and narrow the country’s swelling budget deficit.

President Dilma Rousseff signed a presidential decree revoking the prior exemption from the so-called IOF tax on loans made by the BNDES or its subsidiaries.

The 1.5 percent tax will be charged during the first year of the operations and should raise an extra 3 billion reais ($816.86 million) a year, finance ministry officials said in a briefing with reporters in Brasilia.

The government will also hike taxes on alcoholic beverages starting in December to raise an extra 1 billion reais a year. Computers, tablets and smartphones will also pay higher duties.

The move aims to reverse policy decisions from Rousseff’s first term that many analysts blame for the precarious state of public finances. The tax increases together will raise an extra 11.2 billion reais a year for the government.

On Monday, Rousseff sent Congress a budget bill forecasting a primary budget deficit next year and urged lawmakers to help fix a fiscal crisis that threatens the country’s investment-grade rating. ($1 = 3.6726 Brazilian reais) (Reporting by Luciana Otoni in Brasilia and Guillermo Parra-Bernal in Sao Paulo Editing by W Simon and Andrew Hay)

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