MercoPress. South Atlantic News Agency

Another victory for Lula da Silva.

The Brazilian Senate approved this week another crucial piece of legislation for the Luiz Inacio Lula da Silva administration, an overhaul of the taxing system in one the world's countries with most uneven wealth distribution.

This follows the Congressional passing last week of the deficit ridden pensions' system reform.

After months of Congressional debate and political transactions, the reforms were approved by the Brazilian Senate by a vote of 64-5. However twelve of the total 81 federal senators did not vote.

With these two crucial bills under his arm Mr. Lula da Silva will have fulfilled in his first year in office one of his main electoral promises and cleared the way for a major development program for South America's richest and leading country. The reform of the tax system faced strong opposition from certain business sectors and most state governors who fear the impact of higher federal taxing, revenue reduction at regional level and a loss of fiscal autonomy.

Even when public opinion polls indicate that most Brazilians support the reforms an important percentage is clearly against including a temporary tax on financial transactions, which is easily and readily collected by the banking system. The tax reform is scheduled to become effective in three stages extending until 2007 when a single value added tax will be imposed substituting a range of other levies.

During the negotiation process of these two vital reforms President Lula da Silva was forced to have four dissident Congress members expelled from his Workers Party and according to Brasilia analysts a cabinet reshuffle could be in the making to include representatives from other parties (right wing) that supported the legislation.