Brazil bank chiefs balk at tax hike proposal, urge spending review

Reuters

2 days ago

SAO PAULO, June 10 (Reuters) - The chief executives of some of Brazil's largest banks on Tuesday expressed concerns over government plans to raise taxes to meet the federal fiscal target, advocating instead for a review of public spending.
The proposed fiscal measures, which President Luiz Inacio Lula da Silva has yet to formally receive, include higher taxes on online betting, private credit instruments and financial institutions, while trimming a tax hike on the IOF financial transaction tax.
The government raised the IOF tax last month by decree, sparking backlash from Congress and the market.
Roberto Sallouti, CEO of investment bank BTG Pactual , said at an event hosted by banking federation Febraban in Sao Paulo that focusing on spending efficiency would be preferable to tax increases, which he argued would harm economic growth.
"Isn't it time to seek greater efficiency in Brazil's public budget spending?" Sallouti said, warning that increasing taxes would increase the cost of doing business in the nation.
Lula's administration has so far avoided putting spending cuts on the agenda and defended allocations toward sweeping benefits programs.
Marcelo Noronha, CEO of lender Bradesco , told the same panel that fiscal balance should be achieved through expenditure cuts, not revenue increases, and called for dialogue with policymakers.
Santander Brasil CEO Mario Leao acknowledged the difficulty of such decisions but stressed their necessity. "No one wakes up wanting to pay more in taxes, no one wakes up wanting to manage spending proactively, but these are agendas that Brazil has to face," Leao said.