BRASILIA (Reuters) -Brazil’s federal tax revenue hit a record high in the first half of the year, lifted by strong June collections, revenue service data showed on Thursday, as President Luiz Inacio Lula da Silva seeks to boost public income to shore up fiscal accounts.
Federal tax revenue rose 6.62% in June from a year earlier in real terms, reaching 234.594 billion reais ($42.51 billion).
From January to June, revenue totaled 1.426 trillion reais, up 4.38% in real terms from the same period last year. Both the monthly and year-to-date figures were the highest ever recorded for their respective periods, the tax authority said.
Revenue from the IOF tax on financial operations increased in June after the government raised the levy on several transactions via decree in late May.
Although Congress later overturned the measure, it was reinstated earlier this month following a Supreme Court decision.
The revenue service also highlighted a rise in income tax collection on financial investments, driven by the elevated benchmark interest rate, Selic, “which contributed to the performance of fixed income funds and securities.”
Policymakers have raised the Selic by 450 basis points since last September to fight inflation, taking the rate to a nearly 20-year high of 15%.
Despite strong tax revenue, the government projected earlier this month a primary deficit of 26.3 billion reais for the year, excluding nearly 50 billion reais in court-ordered payments that the Supreme Court ruled should not count toward the fiscal target.
While the figure remains within the zero-deficit goal’s tolerance band of 0.25% of GDP, it underscores the challenge of balancing the budget amid rising mandatory spending, including pensions and social benefits.
($1 = 5.5187 reais)
(Reporting by Marcela Ayres; editing by Philippa Fletcher)
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