Brasília - In what is being described as the beginning of a new Brazilian industrial policy, president Luiz Inácio Lula da Silva has ordered a 30% reduction in the Capital Goods Tax (Imposto sobre Bens de Capital). That means the tax (IPI) will drop from 5% to 3.5%. The move is also in keeping with the tax reform bill approved by congress.

The decision met with approval from the head of the São Paulo Manufacturers Federation (FIESP), Horácio Piva, who said it would mean more investments and jobs. He said the real importance of the reduction is that it shows a clear intention and means the government has finally made industrial policy a priority. (AB)