Brazil doubles tax on consumer credit to fight inflation

Friday, April 8th 2011 - 07:27 UTC

Full article 3 comments

Brazil doubled a tax on consumer credit as the administration of President Dilma Rousseff’s shifts its focus to fighting inflation. Beginning Friday consumer loans, excluding mortgages, will be subject to a 3% annual tax, up from a previous rate of 1.5%, according to a Finance Ministry statement. Read full article

Comments

Disclaimer & comment rules

GeoffWard
Growth of credit looks good to the new middle class, but it is over 20% per year and needs a bucket of cold water throwing over it.

Credit, like inflation, is cumulative in the economy and also as the economy grows, 20% of a big economy is a much bigger quantitative problem than 20% of an embryonic economy. And if it spreads into social groups unable to balance their books as inflation increases, then the bubble bursts with a vengance.

With ever increasing levels of personal debt , especially mortgages, compounded by high levels of state (federal) debt, the Brasilians are about to get their own taste of the 'British disease'.

Mantega - be very, very careful.
Apr 08th, 2011 - 06:36 pm - Link - Report abuse 0
-+
Forgetit87
Debt as a percentage of househould income has been stable (at 25%) since 2006. And actually, higher inflation is good for those with high levels of indebtness.
Apr 08th, 2011 - 08:52 pm - Link - Report abuse 0
-+
GeoffWard
If income keeps pace, certainly. But if it doesn't?
Apr 08th, 2011 - 09:26 pm - Link - Report abuse 0
-+

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!