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Brazil Gets Back a Banned Tax Under New Name

Brazil's Finance Minister, Guido Mantega CPMF is out, IOF is in. Despite promises from Brazilian President Luiz Inácio Lula da Silva that new taxes would not be created to compensate for the 40 billion reais (US$ 22.5 billion) the government lost when Congress at the end of 2007 discontinued the Temporary Contribution on Financial Transactions (CPMF) tribute, new tariffs were announced the very first working day of the new year.

According to Brazil's Finance Minister, Guido Mantega, another presidential temporary decree will create a 0.38% tax on all financial operations in the country. The levy known as IOF (Tax on Financial Operations) will be applied on business and personal financial operations, including real estate loans, insurance, exchange and international credit card operations.

Mantega recognized that the only thing that changed was the name of the tax from CPMF to IOF. "All the government did was to change from six to half a dozen," he told reporters. The new tariff starts being charged today.

The government's package also includes a hike from 9% to 15% in the CSLL (Social Contribution on Net Profit), a tax charged national companies. Company owners will have three months to comply with the higher tariff.

The CSLL and IOF together should raise 10 billion reais (US$ 5.6 billion). As for the other US$ 30 billion reais (US$ 16.8 billion) the government has to make up for there are plans for budget cuts and the hope that the economy will grow enough to cover the remaining 10 billion reais.

According to Mantega, all three powers, Executive, Legislative and Judiciary will have to save money. The details of the cuts should be disclosed only next month, however.  

"Everyone will have to tighten a little more their belts," said the Finance minister. Mantega assured that the financial sector profitability will not be affected by all these measures.

"We think that we have to make an across-the-board cut," said Planning Minister, Paulo Bernardo. "Our intention, however, is to preserve the PAC (Growth Acceleration Program) and the social programs."

According to Bernardo, the biggest cuts will be made in investments. And he echoed his colleague Mantega saying: "Everybody will need to tighten their belt even if they need to add a hole to it."

The Finance minister ruled out new resources for the health sector, which directly benefited from the old CPMF tax. He also discarded any reduction of taxes for industries.

The Planning minister added that the competitive examinations for public posts will be reevaluated and that cleaning and security guard contracts will be reviewed.

On December 20, president Lula said that he wasn't worried at all about having lost his battle to keep the CPMF  tax alive. "I didn't lose not even a minute of sleep over this," he told reporters, adding:

"The only one who is worried is Guido Mantega because he is the one who sits on the money…We will find a way out to compensate for the 40 billion reais."

That same day the president guaranteed that there wouldn't be any tax package to compensate for the CPMF loss and that the would not think about the subject before 2008.

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  • Show Comments (20)

  • João da Silva

    Lloyd Cata
    [quote]Wish it wasn’t so easy, but as usual about money. With these people…always follow the money. [/quote]

    Lloyd, thank you so much for taking your time to respond to my questions. A very profound analysis of the current geopolitical scenario and I do appreciate it. Yes, I got curious right from your first post and this recent post makes lots of sense.Unless one keeps current with the world affairs, it is impossible to put all the pieces of the puzzle together. The reason for my asking you so many questions was to confirm my line of thoughts.If I taxed your patience, please do accept my apologies.

    For the past few years, the doom sayers have been saying that U.S is a declining power and I always found it hard to believe that it will not react to counter the onslaught of the “Old Europe” (a favorite phrase of good ole Rummy). You are right. Considering all the facts you have put forth, the final venue available is indeed the Southern Hemisphere,not only Latin America but also SOUTH AFRICA(Throw in Kenya and Zimbawe too).

    [quote]Do not miscalculate the importance of Brazil to what is going to develop. Do not underestimate what is at stake. You are not, yet, internally or externally prepared for the agenda of the New World Order, but you are crucial to its success. The only question is whether Brazil will stand with the oppressed or with the oppressors. The answer will for many centuries determine the direction of humanity. This may seem an exaggeration, but it is simply the answer to the calculation. Brazil and Latin America can prevent the continued domination of the Southern Hemisphere by the Empire.[/quote]

    I am not miscalculating the importance of Brazil or what is at stake.If you really study Brazil, it is the only country in Latin America that has immigrants from all over the world. In a way, it is also a melting pot. Chile does not go overboard about the “Old Europe” either. Of course, I agree with you that we are not prepared internally nor externally for the agenda of the NEW ORDER, because the country was for too long isolated from rest of the world. One of the things that our Military Government did NOT do was to promote the good things we have. The successive governments after the Military is not doing a good job either. However, I think that when the push comes to shove, the middle class Brazilians will “play along”. Mind you, we do not have territorial ambitions to build bases anywhere in the world, but we would very much like to see more actions on bridging the gap between the poor and the rich,less corruption,less violence, better accountability, etc; The military did manage to do it during its 21 years of rule and kept the oligarchs in their right place. Sometimes I think that if they were governing in a global economy, the progress of the country would have been faster.

    BTW, I got a gift from my better half for X-Mas and New Year. A nice book written by Ken Follet. Once the gift was unwrapped, she insisted that she read it first and so I let her do so. She is also bilingual and likes to read the books in the original language in which they were written. I bet you have read Ken FolletÀ‚´s books.

  • Lloyd Cata

    JoÀƒ£o
    Wish it wasn’t so easy, but as usual about money. With these people…always follow the money.

    US needs to re-inflate its economy, both fiscally and physically. It cannot do it internally due to the wage and environmental laws. Corporate America, as even the blind can see, does not necessarily fly the American flag. They must have a venue for low wages, lax law enforcement, and high profits. Given that American expansion in Asia can only decline with Chinese expansion in the area, the world arena for American market domination is shrinking daily. Given that China also is contesting US/EU domination of African markets, the US is positioning military assets and creating a military command(AFRICOM) in Africa to shore up the Africa sector(see Libya’s re-emergence). This being the first time that the US has committed to militarily enforce the colonial status quo in Africa. This is no small thing in the agenda of the New World Order. Despite this, Chinese influence will be a factor going forward.
    The Arabian/SW Asian area can no longer be exploited to the extent they were in the past. The global banking systems are currently re-engineering their platforms to accommodate the new Arab status in world markets(note the bailout of US and British banks by Arab financiers due to the Housing Bubble). Unfortunately, the terrorists have succeeded in increasing Arab sensibilities with respect to Western practices, both among the Arab governments and the people.

    The only venue still available, and accessible, is Latin America; i.e. the Southern Hemisphere. The resources, labor force, and corrupt governments are particularly suited to compliment the expansion of the Western markets. The building blocks of this attempt are being put in place daily.
    Your access to my other threads; i.e. security forces, capital inflows(dumping dollars), and empirical practices, should answer most of your other questions in this area. The answer to your question as to WHY WAR(?) is a philosophical one , and not easily divined. Instead, I will leave you with this; “Why not war?; when we have so much surplus arms returning from the Middle-East. The Empire needs new technology to defeat its enemies, and the weapons of the past are quite suitable for the South American markets. Private corporate armies are daily being trained for the Latin American arena, and if Mr. Chavez did not exist, they would have to invent him.

    Do not miscalculate the importance of Brazil to what is going to develop. Do not underestimate what is at stake. You are not, yet, internally or externally prepared for the agenda of the New World Order, but you are crucial to its success. The only question is whether Brazil will stand with the oppressed or with the oppressors. The answer will for many centuries determine the direction of humanity. This may seem an exaggeration, but it is simply the answer to the calculation. Brazil and Latin America can prevent the continued domination of the Southern Hemisphere by the Empire.

  • João da Silva

    Llyod Cata
    [quote]That is why the odds of a war in Latin America are pretty good.[/quote]

    Ah, I forgot to ask. Why are the odds of a war pretty good? Another mysterious statement of yours. If there is one, Brazil might play along. Remember Britain Vs Argentina over the Malvinas in 1982?

  • João da Silva

    Llyod Cata
    [quote]Hanging up the phone tax.[/quote]

    Thanks once again. It proves my point. When the Telecom market is in growth stage, it profitable for BOTH for the Operators as well as the Governments to keep the call rates high and tax on your phone bill (as in the case of Brazil). The previous government sold our state owned Telcos to the members of the “Empire” supposedly to “stimulate” the competition and bring “down” the tariffs. It did not bring down the tariffs,but the biggest beneficiaries are the state governments that receive 25% of your phone bill as “Service Tax”. The operators as well as the governments (and the phone set manufacturers) are all happy with the situation.

  • João da Silva

    [quote]The fastest track to success is losing a war to the USA.[/quote]

    🙁

    Welcome back Ric and happy new year to you and yours.

  • João da Silva

    Llyod Cata
    Thanks Lloyd, i will go through the site and get back to you. I am sure our friend Bo has something to comment about it too!

    [quote]That is why the odds of a war in Latin America are pretty good. If Brazil will just play along, I’m sure something could be arranged.[/quote]

    Right. But I still remember your comment about how the Spaniards were recruited quickly to go into Iraq. Would highly appreciate if you go further into this detail.

  • Ric

    The fastest track to success is losing a war to the USA.

  • Lloyd Cata

    JoÀƒ£o
    Spanish American War started in 1898. Tax repealed in 2006.

    http://www.highbeam.com/doc/1G1-155400903.html

    BTW, this is another US war where the facts are still disputed, to this day. You see, manufacturing the evidence for war is something of a specialty in the US. That is why the odds of a war in Latin America are pretty good. If Brazil will just play along, I’m sure something could be arranged.

  • Eduardo C.

    JoÀƒ£o da silva
    I also wish you a Happy new year to you and your family

  • João da Silva

    Eduardo C
    [quote]CH.c. will write for me[/quote]

    Dudo, I am sure Ch.c will oblige you and write devastating comments about these Ministers!

    BTW, very happy New Year to you and your family.

  • Eduardo C.

    CH.c. will write for me

  • Eduardo C.

    Once more, this minister together with his( irmÀƒ£os metralha) group. Show his habilities to……….

  • Eduardo C.

    Possible what?
    Give the right answer to this politicians! And have a much better Brasil, with EGALITÀƒ‰

  • Eduardo C.

    EDUCATION
    But without education isnÀ‚´t possible!!

  • Eduardo C.

    When they are really fed up with the status quo along comes someone like Chavez.
    Believe me.. we are far away from this.And i donÀ‚´t know if itÀ‚´s some thing good our not 🙁 Because some times.. i thing it whould be the only way..to wake up this PACIFIC LAZY Society with out any EDUCATION.

  • João da Silva

    Llyod Cata
    [quote]You know in the US we have a tax still in effect from the Spanish-American War. Was supposed to fund the war but I guess it’s still not over, so those Spaniards better watch out!
    [/quote]

    This is a news to me. Who pays this tax?. How are the proceeds from this tax spent? Is Emperor Juan Carlos aware of this tax?

    [quote]Seriously, this is what passes for democracy today. These ‘democratic’ governments confiscate your money due to their own inability to manage and then they put the middle-class against the poor when they are in trouble.[/quote]

    I sadly agree with you. If you go back to 1990, that is what CollarÀ‚´s government did. It froze the savings bank accounts of both middle class and the poor for 12 months and returned the money in 18 equal installments! In that instance, the middle class joined the poor and impeached him!! All those responsible are now back in power and allies of Lula.

    The way the ministers are upset about the elimination of CPMF and putting the fear of God into the minds of the poor people how it is impossible to manage all the social programs gives many an impression that they are after the money of the middle class again. One way or another.

  • Lloyd Cata

    Death and Taxes, Death or Taxes, Taxed to Death
    LMAO!!! This is really not funny, but I can’t help it. You know in the US we have a tax still in effect from the Spanish-American War. Was supposed to fund the war but I guess it’s still not over, so those Spaniards better watch out!

    Seriously, this is what passes for democracy today. These ‘democratic’ governments confiscate your money due to their own inability to manage and then they put the middle-class against the poor when they are in trouble. Every time they are about to get caught they shuffle the deck again. Middle class gets angry to think that $40 billion(R) is going to lazy people, and poor people are tired of the middle class covering up the corruption of their bosses. Once a significant portion of the middle class sees their earnings in jeopardy they join the poor to overthrow the government, so the only trick for the governing class is to keep the oligarchs happy, keep the majority of the middle class against the poor, and keep the security and judiciary in guns and butter.
    Same in the US and Brazil. Same game different faces. How do you think we get Bush, Clinton, Bush, and probably Clinton again. Already you know that the mayor of Sao Paulo will probably succeed Lula and no one has voted yet! The ordinary people pray for change but are afraid of chaos, so they continue to support the status quo. When they are really fed up with the status quo along comes someone like Chavez. No one is happy, but everyone eats.

    So continue to congratulate yourselves about how beautiful, rich, and intelligent you are, and PAY YOUR TAXES!

  • João da Silva

    [quote]Why didn’t they just keep CPMF…for the love of christ. Unreal how these politicians in Brazil do WHATEVER they want regardless of the will of the people. Brazil is NOT a democracy.[/quote]

    My point is that CPMF was booted out, because may felt the proceeds were not used for the original purpose for which it was created.By replacing CPMF, with increase in the IOF, the politicians did laugh at the will of the people.So it proves that we are not living in a democracy. Not many people have grasped the significance of this, because it was announced when everyone was on the beach during the long New Year Holidays. I wouldn’t be surprised if another new tax is created (to compensate for the other 30 Billion “loss”) during the Carnival.

  • bo

    You just have to laugh…
    Why didn’t they just keep CPMF…for the love of christ. Unreal how these politicians in Brazil do WHATEVER they want regardless of the will of the people. Brazil is NOT a democracy.

    Reference the gun vote and now CPMF. They still do whatever they want, they just call it something else.

  • João da Silva

    Brazil Gets Back a Banned Tax Under New Name
    Another misleading title.

    IOF already exists on many of the financial transactions. Only news is that the percentage has been increased to 0.38%.

    [quote]”Everyone will have to tighten a little more their belts,” said the Finance minister. Mantega assured that the financial sector profitability will not be affected by all these measures.

    “We think that we have to make an across-the-board cut,” said Planning Minister, Paulo Bernardo. “Our intention, however, is to preserve the PAC (Growth Acceleration Program) and the social programs.” [/quote]

    Both the ministers are telling the Middle Class to tighten their belts, as nobody believes that the government is capable of tightening its belt. Most probably, to save a few pennies, no free “cafezinho” or water will be served in government offices.

    I have seen this movie before and many times.

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