Brazil's tax revenue surged in March on the back of consumer demand that has continued to be robust the federal tax authority said this week.
Tax revenue in March, adjusted for inflation, jumped to 71 billion Real (44.9 billion US dollars), an increase of 9.7% from a year earlier. Tax revenue in February totalled 64.14 billion Real.
Even when Brazil’s economy is set to slow growth to 4.5% this year the 7.5% of 2010, a rise in aggregate wages, strong retail sales and industrial output compared to the previous year helped drive March tax income, the tax authority said.
Brazil's public accounts deteriorated significantly in 2010 as the government increased spending ahead of October's presidential elections.
The country missed its main budget target with a consolidated primary surplus in the 12 months through December of 2.78% of GDP, well below the goal of 3.1% of GDP for the year.
Investors look at primary budget surplus, the excess in revenue over expenses but excluding interest payments, as a gauge of the country's ability to service its debt.
The administration of the President Dilma Rousseff announced budget cuts this month of 50 billion Real in an effort to meet its budget target and help contain rising consumer prices. The tax authority expects an increase of 9% in tax revenue for 2011, not adjusted for inflation.