Brazil’s federal tax revenue rises 17.96% in June to record high

Brazil’s federal tax revenues grew 17.96% year-on-year in June to a record high, according to official data released Thursday, boosted by higher corporate income taxes and oil royalties.

According to the revenue service, federal tax revenues were R$181.04 billion (US$33.14 billion), the highest June figure since the data series began in 1995.

The government said corporate income tax was up 37.47%, following higher contributions from the fuel and retail sectors.

The tightening of monetary policy by the central bank to curb inflation has lifted yields on fixed-income investments and, as a result, capital gains taxes rose 97.42% from June 2021, according to the revenue service.

Higher oil royalties, in line with rises in international markets, also drove the record gain.

In the year’s first half, tax revenues grew 11% in real terms over the same period last year.

Economy Minister Paulo Guedes has said that the strength of the economy has guided the record figures, giving the government confidence to cut taxes and increase income transfers to the poorest without compromising the fiscal outcome.

Brazil’s Congress earlier this month approved a government-backed spending package ahead of October elections, seen as critical to improving the popularity of President Jair Bolsonaro, who is seeking re-election but is trailing in opinion polls.

Some analysts say non-recurring factors have boosted fiscal revenues, such as double-digit inflation and rising commodity prices amid the war in Ukraine.

Reuters

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