The Brazilian government on Thursday hiked taxes on fuels and froze additional federal spending in a bid to keep on track for compliance with annual budget goals. The Finance Ministry announced higher taxes on gasoline, diesel and ethanol. Effective immediately, the PIS/Cofins welfare taxes on all three fuels will roughly double. The tax on gasoline, for example, will rise from R$0.38 per liter to R$0.79. The government expects to raise additional revenues this year of R$10.4 billion. The Finance Ministry also announced an additional freeze on federal spending of R$5.9 billion. Earlier this year, the government froze R$38 billion in spending. The measures are designed to make it possible for the government to meet its 2017 budget goal, which is a primary deficit of no more than R$139 billion. Meeting the goal has become difficult because of flat tax revenues and rising spending, espe cially on pensions. The administration of President Michel Temer has proposed a sweeping pension reform but progress on the reform in Congress has been slow. Even if passed, savings from the new pension arrangement will be small in the first few years.
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