Brazil to cut taxes, maintain spending
16 July 2012
Posted by: SAIT Technical
By SAPA AFP (Business Report)
Brazil would not adopt EU-style austerity measures to tackle its economic challenges and would instead cut taxes and maintain social programmes, President Dilma Rousseff said on Friday.
Inaugurating an oil platform in the north-eastern state of Bahia, she levelled criticism at the belt-tightening measures adopted by debt-ridden European countries, including salary cuts and higher taxes.
"Brazil is following a different path. This is not our way. Our way is to maintain our investments, seek each time to ensure that the subsidies, the advantages and the successes of this development are distributed,” she noted.
She made it clear that resource-rich Brazil, the sixth-largest economy, would not restrict any labour rights, would boost stimulus measures and would act to prevent the national currency, the real, from appreciating against the dollar as this would harm the fragile industrial sector.
She pointed to the central bank's decision to cut its base rate from 12.5 percent last August to a historic low of 8 percent this week. Bank authorities hope their gradual rate cuts will reduce the cost of credit for consumers.
"We will stick to this target: tax cuts. Gradually we will turn the crisis into an opportunity,” Rousseff said.
She said her government wanted to cut production costs "in a systematic way”, through tax cuts and "not as is being done (in Europe) by cutting salaries and social gains”.
Brazil is experiencing anaemic growth which authorities blame on the impact of the euro zone debt crisis, the economic slowdown in China and the lacklustre performance of the US economy.
Last year, the country grew a paltry 2.7 percent, down from a sizzling 7.5 percent in 2010. The central bank slashed its official gross domestic product growth forecast for this year to 2.5 percent from 3.5 percent.