Brazilian Finance Minister Henrique Meirelles announces budget cuts of R$ 42.1 billion; scraps payroll tax exemptions

Finance Minister, Henrique Meirelles reveals plans for the Brazilian Federal government to plug a gap of R$ 58.2 billion in its budget. The plan aims to cut R$ 42.1 billion to reach the fiscal target of a deficit if R$ 139 billion for the year. The government is also scrapping payroll exemptions for almost all sectors of the Brazilian economy. Effective since 2011, payroll exemptions benefitted 56 sectors of the economy, which pay 2.5% or 4.5%, depending on the sector, in social security taxes, instead of 20%. In addition, there will be a financial transaction tax (IOF) on credit union operations.

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