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Brazil opposition candidate considers wealth tax

Wednesday, 27 August, 2014

Large fortunes may face a wealth tax in Brazil if presidential candidate Aecio Neves wins the next election in autumn this year.

He explained earlier this month a tax on super wealth was on his agenda, and he would be discussing the idea with his economic advisors.

"We can discuss a different tax for large fortunes. We don't have a percentage in mind yet. We have to study the benefits, how it would impact federal revenues, to see if it would be justified," he said, quoted by Reuters.

The tax, versions of which have been proposed in the past in Brazil but never approved into law, is part of a broader plan to modernise and simplify Brazil's complex taxation system.

Brazilian companies spend 2,600 hours a year on their taxes, compared with an average of 369 hours in Latin America and 175 hours in nations of the Organisation for Economic Cooperation and Development, according to a World Bank study.

Opinion polls show the Workers' Party is facing its toughest election since taking office in 2003 that will likely go to a second-round runoff in late October between Neves and President Dilma Rousseff.

However, the presidential race was upended last week by the late entry of Silva, a popular environmentalist and anti-establishment icon, following the death of her party's previous candidate in a plane crash.

A recent poll showed Rousseff in first place for the October 5 vote, with Silva and Neves in a statistical tie for second. The top two finishers would face each other in an October 26 runoff unless a candidate wins more than half of the votes in the first round.

Central bank data suggests the economy is contracting, which could give new ammunition to Neves and Silva. Analysts cited by Bloomberg have cut their 2014 growth forecast for 12 straight weeks to 0.79 percent, which represents the weakest performance since the economy contracted in 2009.

Past attempts to pass a wealth tax into law failed as former president Fernando Henrique Cardoso of the centre-right PSDB party and later Lula da Silva refused to support the idea when they were in office.

Sources