Brazil’s Tax Burden Is Preventing Industry from Investing More

In April, entrepreneurs in the manufacturing sector were less optimistic about overall investments in their sector than they were in April, 2005. This finding is part of April’s Conjunctural Survey of Manufacturing Industries, released this Thursday, May 18, by the Getúlio Vargas Foundation.

The survey shows that 16% of the 1,043 entrepreneurs who were interviewed intend to invest less. In April, 2005, this percentage amounted to 8%. 55% plan to invest more, compared with 65% in April, 2005.

When investments on fixed assets (purchases of new equipment, factory expansion, etc.) are considered, the outlook is similar: 55% of those interviewed this April intend to make this type of investment, as against 65% in April, 2005.

The reason given by 49% of the entrepreneurs for investing in fixed assets is the need to expand production. This was the second best result in the historical series that began in 1998. The best was in April, 2005, when 52% of the entrepreneurs interviewed presented this justification.

Historically, according to the survey, "it is only in years in which growth prospects are good that this response option has been the one most frequently mentioned by the companies."

The research data reveal that 34% of those who were interviewed informed that the tax burden keeps the sector from investing more. Uncertainty about the demand for their products was considered by 29% of the entrepreneurs as an important factor limiting investments by the manufacturing sector.

Agência Brasil

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