By Marcela Ayres and Bernardo Caram
BRASILIA (Reuters) – Brazil’s government wants to conclude voting on tax reform later this year to boost welfare aid from 2023 on, if President Jair Bolsonaro wins re-election in October, an official source said.
According to the source with direct knowledge of the matter, who spoke anonymously because the plans are not public, the government hopes a new tax on corporate dividends would provide revenue for welfare aid promised by Bolsonaro, who is trailing leftist Luiz Inacio Lula da Silva in the polls.
The Lower House approved a tax reform in September 2021, introducing a 15% tax on corporate dividends, which are currently exempt, but the Senate has yet to vote on the bill.
Earlier this month, Congress passed a massive spending package that raised the cash transfer program for low-income families, called Auxilio Brasil, from 400 to 600 reais ($116.02) for this year only. The expenditure was allowed to bypass the constitutional spending cap due to the inflationary effects of the war in Ukraine.
The Treasury has already stated that the permanent expansion of the program would require 50 to 60 billion reais per year. According to the source, the government is still looking into how this would be accommodated within the spending rule next year.
($1 = 5.1714 reais)
(Reporting by Marcela Ayres and Bernardo Caram; Editing by David Gregorio)