BRASILIA (Reuters) -Brazil’s finance ministry plans to raise the minimum cigarette price to offset losses from tax benefits granted to companies in some sectors and small municipalities, a government source told Reuters on Monday.
The hike is expected to be part of a package to compensate for nearly 26 billion reais ($5.03 billion) in revenue loss from the exemption of payroll taxes approved by Congress in December, the source said.
Brazilians now pay at least 5 reais, or just under $1, for a pack of 20 cigarettes. A hike would boost federal tax revenue on the product.
The finance ministry’s executive secretary, Dario Durigan, told reporters the government was not raising taxes on cigarettes. He did not comment on the reports of plans to raise the minimum price to sell them.
The plan was reported earlier on Monday by local newspaper O Estado de S. Paulo, which said the proposal on cigarette prices would bring in 3 billion to 4 billion reais, so other sources would also be needed to make up for the lost revenue from the payroll taxes exemptions.
Finance Minister Fernando Haddad said on Monday that measures to increase revenue are ready and the government is considering whether to send them to Congress this week or next via an executive order.
($1 = 5.1706 reais)
(Reporting by Bernardo Caram; Additional reporting by Victor Borges; Writing by Marcela Ayres and Andre Romani; Editing by Richard Chang and Jamie Freed)
