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LatinNews Daily - 17 September 2021

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In brief: Brazil raises taxes to pay for social programme

* Brazil’s President Jair Bolsonaro has issued a decree which temporarily raises the tax on financial operations (IOF). The economy ministry has said that this is with the aim of financing the ‘Auxílio Brasil’ social programme, which is due to substitute the existing Bolsa Família conditional cash transfer as well as compensate for the end of the coronavirus (Covid-19) related emergency income payments. “The decision [to temporarily raise the IOF] has been taken due to the observance of fiscal rules”, the economy ministry said in a statement, explaining that the fiscal responsibility law requires the government to indicate the source of an increase in mandatory spending. The government expects to fund the Auxílio Brasil next year through the reinstatement of a tax on profits and dividends, which still needs to be approved by the senate. The tax hike comes into effect on 20 September and will last until 31 December; the tax on financial operations for individuals will rise from an annual 3% rate to 4.08%, while that for businesses will increase from an annual rate of 1.5% to 2.04%.