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Brazil to announce $4.1 million tax reduction
(Xinhua)
Updated: 2008-12-12 13:59

RIO DE JANEIRO -- The Brazilian government will announce a 10 million reais ($4.1 million) reduction in tax  in order to stimulate consumption and minimize the effects of the international financial crisis, the Brazilian media said on Thursday.

According to Folha de Sao Paulo daily, President Luiz Inacio Lula da Silva met on Thursday morning with 29 of the most important businessmen in the country to present the measures firsthand and assure that the government is working to fight the effects of the crisis.

Brazil's Development, Industry and Foreign Trade Minister Miguel Jorge, Finance Minister Guido Mantega as well as Central Bank President Henrique Meirelles also attended the meeting.

The new measures are aimed at benefiting both consumers and industrial sectors. Consumers can enjoy a tax reduction withheld from workers' paycheck, the newspaper said.

The tax incidence in Brazil currently goes from 15 percent to 27.5 percent, depending on the wages. Under the new measures, the maximum incidence will stay the same, but the minimum margin of 15 percent will be lowered.

The government also intends to increase the credit in the market by reducing the Tax over Financial Operations (IOF) from 3 percent to 1.5 percent, and by assuring credit to the companies that manage to maintain their production levels and do not make mass dismissals.