May 7, 2017 / 4:25 PM / 9 months ago

Brazil's Meirelles eyes veto to tax relief plan, Estado says

SAO PAULO (Reuters) - Brazilian Finance Minister Henrique Meirelles would recommend a presidential veto to a revised plan allowing reductions in the principal of corporate tax debts after lawmakers introduced unwanted changes to the original proposal, he told O Estado de S. Paulo newspaper in an interview published on Sunday.

Under the plan, tax deadlines for corporations would be extended and interest payments would be stretched out.

Last week, a congressional committee passed a watered down version of an executive decree of the plan which originally envisioned no relief on the value of the principal owed. The changes cut potential revenues from the so-called Refis program to 2 billion reais ($630 million) from up to 8 billion reais.

In the interview, Meirelles said President Michel Temer’s support base in Congress had been directed to vote for the original plan. If the new proposal were approved in a congressional plenary vote, Meirelles would recommend that Temer veto it, because of the reduction in federal revenues.

Calls to the ministry’s press office to confirm Meirelles’ comments were not immediately answered.

According to Meirelles, he does not want to anticipate his recommendation because the matter is still subject to negotiations.

The situation underscores the pressure facing Temer’s coalition as it seeks to muster enough support to pass vastly unpopular pension and labor reforms. Analysts have said the committee’s decision to water down the Refis decree might be a tactic to bargain the government’s support to approve the reform agenda.

Meirelles denied such claims, telling Estado that the Refis is not part of the legislative agenda that the government is discussing with lawmakers to win their support for the reforms.

Overhauling pensions is a contentious issue in Brazil, which has one of the world’s most generous social security systems, allowing retirement on average at the age of 54 with almost full benefits, compared with 72 years in Mexico.

($1 = 3.1744 reais)

Reporting by Guillermo Parra-Bernal; Editing by Phil Berlowitz

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