Record revenue stems from rebuilding tax base, says Haddad
Brazil´s Finance Minister Fernando Haddad attributed the record tax collection in September primarily to the rebuilding of the tax base by reversing measures that benefited wealthier groups. Speaking on Tuesday (Oct. 22) during his trip to Washington, USA, Haddad also dismissed the International Monetary Fund's (IMF) report suggesting that Brazil's growth is driven by fiscal stimulus.
“We're going to rebuild the fiscal base. Not least because the inherited expenses for which there was no source of funding have to be paid,” said Haddad.
At the end of last year, the minister explained that Brazil's National Congress approved measures that have boosted tax revenues this year. These include taxing offshore companies (foreign investment companies), advancing income tax on exclusive funds, and eliminating subsidies for large corporations.
Haddad emphasized that the rise in revenue is crucial for meeting the zero primary deficit target, as the government continues its efforts to rein in spending.
On Tuesday (22), the Federal Revenue Service reported a record federal tax collection of BRL 203.17 billion in September, a record in inflation-adjusted terms. This marks an 11.61 percent increase in real terms compared to September 2023.
A record was also set for the period from January to September, with revenue reaching BRL 1.93 trillion, a 9.68 percent increase above inflation.
IMF
Commenting on the latest IMF report, which raised Brazil's 2024 growth forecast from 2.1 percent to 3 percent but lowered the 2025 estimate from 2.4 percent to 2.2 percent, Finance Minister Haddad pushed back against the claim that the country's robust GDP expansion is driven by fiscal stimulus (increased public spending).
“Last year's [primary] deficit [of BRL 230.54 billion] was due to the payment of the previous government's default and was three times higher than what was planned for this year. Nevertheless, the economy is growing more this year than it did last year,” said the minister.
According to Haddad, the country's growth is sustainable, and Brazil is well-positioned to maintain this trajectory. “This year-end revision indicates that the Brazilian economy is expanding with controlled inflation, demonstrating our sustainable growth potential. This is not just a one-time occurrence; we have every opportunity to continue growing,” he concluded.
