Brazil’s Levy Says CPMF Tax Will Protect Worker Benefits

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Finance minister in Brazil, Joaquim Levy, told congressional representatives on Wednesday that if congress does not approve an executive order creating the CPMF (tax over financial transactions), programs which protect workers, such as unemployment benefits, will be at risk.

Levy spoke to congressional representatives at a public hearing at the Chamber of Deputies in hopes that they would approve the economic measures presented to them by the executive branch in August.

“If the CPMF is not approved there is a certain risk that important programs such as unemployment benefits and workers’ protection will be at risk,” Levy explained. “How will we pay if there are no revenues?” he added.

According to Levy the approval of the 2016 budget, including the CPMF tax, is essential for the recovery of Brazil’s economic growth. “The success of the 2016 budget proposal will allow Brazil to once again grow, companies turn once again to investment plans and Brazilians to get on with their lives.”

“Fiscal balance is necessary to bring security, growth and transparency to the country; things which everyone wishes,” stated the official. Since they were announced, there has been negative reaction from both congressional representatives and society to some of the measures.

For Levy the appreciation of the U.S. dollar in relation to the Brazilian real is an opportunity for Brazilian industries to become more competitive and recover from the production decline they have been facing in the past few years. Levy forecasts very good results in the coming years for industries, ‘if they take the necessary measures’.

In the past month the foreign exchange rate has surged with the U.S. dollar closing over the R$4 to US$1 in early October. The depreciation of the Brazilian currency has hindered imports, but exporters are gaining more international participation due to the increased competitiveness of Brazilian products.