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Brazil's federal tax revenue down in August for third straight month

Published Sep 21, 2023 11:30AM ET Updated Sep 21, 2023 11:38AM ET
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BRASILIA (Reuters) - Brazil's federal tax revenue fell for a third consecutive month in August, highlighting challenges faced by the government in improving public finances while relying on increased collection.

Total tax revenue last month dropped 4.14% in real terms over the same month a year ago to 172.785 billion reais ($35 billion), the country's revenue service said on Thursday. This followed monthly decreases of 4.20% in July and 3.37% in June.

The data was once again impacted by a 23.30% plunge in corporate tax collection, according to the revenue service, which had previously benefited from "atypical collections" in the same month last year.

A 16.64% decrease in import taxes also weighed on the results, with reduced import volumes, the weakening of the dollar against the real and lower oil royalty revenues contributing to the negative outcome.

Claudemir Malaquias, head of the government's tax and customs studies center, said that 2022 tax collection was boosted due to higher commodity prices, mainly due to Russia's invasion of Ukraine.

The commodities sector will not have the same performance in 2023, he said at a press conference, anticipating that revenue collection in the final months of this year will be lower than in the comparable period of 2022.

Year-to-date federal tax revenue declined by 0.83% in real terms from the same period in 2022, totaling 1.518 trillion reais.

Despite the economy's unexpectedly stronger performance, revenue collection has been weak in recent months, casting uncertainty on the government's ability to balance public finances as promised under new fiscal rules.

Financial markets are skeptical of the government's goal of eliminating the primary budget deficit by 2024, as it heavily relies on efforts to boost revenue growth, including measures that Congress has yet to approve.

($1 = 4.9308 reais)

Brazil's federal tax revenue down in August for third straight month
 

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