Brazil mulls new taxes for health-official

BRASILIA, May 18 (Reuters) - The Brazilian government on Monday will decide on a tax increase to finance health spending after Congress voted down a key financial transaction tax in December, a senior government official said over the weekend.

The government is considering increasing a tax on tobacco as well as creating a new tax with a 0.08 percent rate on financial transactions, said Jose Mucio Monteiro, minister for institutional affairs.

"Nothing is decided yet, we are studying, evaluating. We'll decide in the meeting on Monday," Mucio, President Luiz Inacio Lula da Silva's main political aide, told the government news agency Agencia Brasil on Saturday.

The cabinet's political coordinators meet on Monday.

A bill, which was approved by the Senate and will be voted by the lower house of Congress this month, would oblige the government to increase spending on health to 10 percent of its gross income by 2011. Currently it spends 7 percent of gross revenue.

The proposed new taxes would require congressional approval.

They would be the latest measure to compensate for a revenue shortfall of 38 billion reais ($23 billion) after Congress voted against the extension of the so-called CPMF financial transaction tax last December.

The government cut spending and raised other taxes earlier this year to help close the gap.

The CPMF was highly unpopular among business leaders and consumers alike, leading many Brazilians to deal in cash to avoid taxes on bank transfers.

Brazil's total tax burden is around 37 percent of gross domestic product, the highest of any major emerging market. (Reporting by Raymond Colitt, editing by Maureen Bavdek)