Wellton Máximo       Reporter Agência Brasil

Brasília – The domestic economic slowdown coupled with generous loopholes in the tax code (“desonerações de impostos”), has resulted in a screeching halt to a series of increases in federal tax revenue that has characterized the Brazilian economy for a very long time.

In June, federal tax revenue was down. According to numbers released by the IRS (“ Receita Federal”) yesterday, in June total revenue was R$81.107 billion, a drop of 6.55%, compared to June 2011, when inflation as measured by the Broad Consumer Price Indes (“IPCA”) is taken into consideration (the IPCA is the government’s official inflation yardstick).

One problem the Receita Federal has to deal with is that it is working with a very optimistic increased revenue forecast of 4% to 4.5% that was made at the beginning of the year. Last week, the Ministry of Planning announced a new forecast: GDP growth of 3% in 2012.

Another problem was the government’s stimulus package that (1) reduced taxes on manufactured goods (“IPI”), especially automobiles, (2) lowered a gasoline and diesel tax (“Cide”) to zero and (3) cut the tax on financial transactions (“IOF”) to boost consumer credit.

In a note, the Receita Federal pointed out that besides the stimulus package, weak performance in the industrial/manufacturing sector brought taxes on production down (“IPI”) at the same time that lower profit levels undermined corporate tax revenue (“IRPJ” and the “CSLL”). In fact, IPI revenue was down 24.49%, compared to June 2011, and IRPJ and CSLL revenue was down 11.4%.

In March, the cumulative increase in federal revenue for the year, compared to the same period in 2011, was 7.32%. In April, it was down to 6.28% and 5.83% in May. In June it was 3.66% with total federal revenue (“impostos e contribuições”) at R$508 billion for the first half.

Allen Bennett – translator/editor The News in English

Link - Desaquecimento da economia e desonerações fazem arrecadação federal cair 6,55% em junho