August Tax Collection is R$5 Billion Above Expected Revenue, Says Guedes

RIO DE JANEIRO, BRAZIL – Economy Minister Paulo Guedes said on Friday, September 6th, that the government keeps having “positive surprises” in terms of tax collection.

According to him, August’s revenue will exceed expectations by R$5 billion (US$1.25 billion). In July, tax revenues increased R$4.1 billion.

He again defended the federal government’s compliance with the spending ceiling as crucial to balance public accounts and said he does not plan “short-term measures” to revive the economy, criticizing previous governments for their decisions.

“In the last two months we have had positive surprises in terms of revenue collection,” the minister said, referring to July, which had already been released and now August.

“It has not been announced yet this month, but it comes to R$5 billion above expectations”, he concluded, saying that the information had been conveyed to him by the Secretary of the Treasury, Mansueto Almeida.

With the increase in revenue in July, the Central Government’s cash office – which includes Treasury, Social Welfare and Central Bank accounts – closed the month with a deficit of R$5.9 billion, the best performance for the month since 2014.

Fiscal difficulties have led the government to announce several spending contingencies throughout the year.

With the risk of paralyzing key areas of the government, President Jair Bolsonaro has even pointed to support for easing the ceiling on public spending this week.

The measure, however, was rejected after pressure from the Ministry of Economy. “We are committed to the spending ceiling,” Guedes said on Friday, in an interview on the automotive agreement between Brazil and Argentina.

“The ceiling is precisely an attempt to limit the source of all our ills, which is the unmanageability of public spending. If I pierce the ceiling, I am calling back the source of all our ills. I’m trying to discuss the floor, which is discretionary spending,” said the minister.

Guedes confirmed that the government is studying actions to reduce unemployment, focusing on reducing labor charges. “When we think about employment, we know the weight of inadequate legislation,” he said.

He said, however, that the measures are still in the pipeline and that he does not intend to speed them up with an eye on the municipal elections in 2020. “I don’t think we should be fiscally irresponsible because we have an election next year,” he said.

“Nobody with any common sense will blame unemployment on Bolsonaro’s administration, which has just over a semester,” he said.

For this reason, he argued, “artificial” short-term measures will not be taken to revive the economy, claiming that this type of strategy has been responsible for the Brazilian fiscal crisis.