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.
Link to government news agency release.
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