Brazil tax hikes won't harm growth

Brazil's finance minister said Tuesday a program of targeted tax increases was designed with the intention to not harm fragile growth in Latin America's largest economy.
"We have no intention of producing a bag of tricks or packages  -- but we shall have to take some measures," Joaquim Levy told reporters as he sets about devising a strategy to lift an economy struggling after four years of low growth.
"Any movement (in tax rates) will be compatible with our objectives," he insisted.
Brazil is looking to rein in its public deficit running at 63 percent of GDP in November.
After posting a first annual trade deficit in 14 years last week, the world's seventh biggest economy announced budget cuts of $8.4 billion a year, with newly re-elected President Dilma Rousseff signing a decree limiting discretionary spending on travel, services and purchasing.
Brasilia has also announced that it is tightening access to unemployment insurance.
Public accounts deteriorated in Rousseff's first term amid continued massive social welfare programs which have lifted tens of millions of people out of poverty over the past decade.
Levy is now looking to steer the economy, forecast to barely grow in 2015, off the rocks while keeping a lid on inflation, which hit a government ceiling of 6.5 percent at the end of last year.
Taking up his position last week, Levy said Brazil would have to "rebalance a few taxes as some were reduced a while ago" and the resulting lack of revenue had been keenly felt.
Tuesday, he indicated that he was targeting the "long-term" reduction of net public debt while increasing savings and attracting sagging investment as Brazil looks to restore market confidence.
He also pledged to seek upward adjustments in electricity rates.
Source: AFP