BRASILIA (Reuters) – Brazil’s Finance Ministry is considering raising the minimum price of cigarettes to compensate for losses linked to tax benefits granted to companies in certain sectors and small municipalities, a government source told Reuters on Monday.
The hike is expected to be part of a plan to offset nearly 26 billion reais ($5.03 billion) in lost revenue from the payroll tax exemption approved by Congress in December, the source said.
Brazilians now pay 5 reais for a pack of 20 cigarettes. An increase would increase federal tax revenues on this product.
Finance Minister Fernando Haddad said Monday that revenue-raising measures were ready and the government planned to submit them to Congress this week or next via decree.
The project was reported on Monday by local newspaper O Estado de S. Paulo, which said the proposal would bring in between 3 and 4 billion reais and therefore other sources of revenue would be needed to make up for the loss.
($1 = 5.1706 reais)
(Reporting by Bernardo Caram; Writing by Marcela Ayres and Andre Romani; Editing by Richard Chang)
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