By Rogerio Jelmayer
SAO PAULO--The Brazilian government has extended a tax cut on automotive purchases to the end of this year, as part of its effort to fuel the domestic economy and also contain inflationary pressures.
It extended the reduction of a so-called IPI tax on vehicle sales, which was expected to expire Monday, to Dec. 31, the financial ministry said over the weekend in a statement.
Last year, Brazil cut the IPI tax in May after start-of-year sales slumped more than 5%. The tax cut, meant to expire at the end of August, was extended through the end of October before being extended again to the end of December 2012. Before the measure expired, however, Finance Minister Guido Mantega said the tax would gradually be phased back starting April 1, returning to its full level by July.
Last year, Brazil's economy expanded just 0.9%, mainly due to tepid industrial production. The auto industry, including auto parts, represents around 25% of the industry in Brazil.
By extending the tax rebate, the government is also trying to avoid some inflationary pressures.
In the 12-month period through mid-March, official inflation rose to 6.43%, well above the government's official inflation target of 4.5%, although within a tolerance band of plus or minus two percentage points.
Write to Rogerio Jelmayer at rogerio.jelmayer@dowjones.com
(END) Dow Jones Newswires
April 01, 2013 06:17 ET (10:17 GMT)
SAO PAULO--The Brazilian government has extended a tax cut on automotive purchases to the end of this year, as part of its effort to fuel the domestic economy and also contain inflationary pressures.
It extended the reduction of a so-called IPI tax on vehicle sales, which was expected to expire Monday, to Dec. 31, the financial ministry said over the weekend in a statement.
Last year, Brazil cut the IPI tax in May after start-of-year sales slumped more than 5%. The tax cut, meant to expire at the end of August, was extended through the end of October before being extended again to the end of December 2012. Before the measure expired, however, Finance Minister Guido Mantega said the tax would gradually be phased back starting April 1, returning to its full level by July.
Last year, Brazil's economy expanded just 0.9%, mainly due to tepid industrial production. The auto industry, including auto parts, represents around 25% of the industry in Brazil.
By extending the tax rebate, the government is also trying to avoid some inflationary pressures.
In the 12-month period through mid-March, official inflation rose to 6.43%, well above the government's official inflation target of 4.5%, although within a tolerance band of plus or minus two percentage points.
Write to Rogerio Jelmayer at rogerio.jelmayer@dowjones.com
(END) Dow Jones Newswires
April 01, 2013 06:17 ET (10:17 GMT)
