MercoPress. South Atlantic News Agency

Brazilian fiscal benefits for industry to prop the economy and help competition

Finance minister Mantega promised an ‘arsenal’ of measures

The Brazilian government that this week promised an ‘arsenal’ of measures to counter the effects of the international crisis and prop the economy will reduce the tax burden for several industries, revealed a Sao Paulo newspaper close to the current administration.

Auto-parts, machines and tools, textiles, tyres are among several industries that will exempt from paying employers’ contribution to social security according to O Estado the Sao Paulo.

The project to be implemented ‘in coming weeks’, contemplates that the benefited factories will nevertheless have to pay a minimum percentage of sales, but that figure is yet to be established.

This apparently will be the first package of the ‘arsenal’ promised by Finance minister Guido Mantega who said Brazil will not remain “with crossed arms” while the “currency exchange war” keeps advancing and eroding manufacturing competitiveness.

Mantega was instructed by President Dilma Reousseff to take the measures needed to stop the appreciation of the Brazilian currency which in the first two months of the year re-valued 10% against the US dollar, and at the same time prop the economy that last year expanded a weak 2.7%.

Brazilian industry also suffered a slowing down in 2011 when it expanded 1.6%, compared to 10% in 2010 and last January actually contracted 3.4% relative to the same month a year ago.

Besides the newspaper report, quoting Finance ministry sources, said that ‘most probably’ next April the industrial production tax on home appliances, a provisional measure implemented in 2011 and which should conclude 31 March, will be extended.