BRASILIA Dec 27 The Brazilian government said
on Friday it will raise a tax on operations with debit cards and
travelers checks made abroad, in a move that will raise the
country's tax intake by 552 million reais ($234.65 million) per
Starting on Saturday, the government will hike the financial
operation tax, known as IOF, to 6.38 percent from 0.38 percent
on those operations. The increase comes at a time when many
Brazilians travel abroad for holidays.
Brazilians already face some of the world's highest tax
rates and tax evasion is common. Workers in Brazil must pay
about 30 percent of their monthly income in taxes, which is
similar to what people in rich northern European countries pay.
Brazilians often complain that high taxes have done little to
improve the country's poor public education, dilapidated
hospitals and crowded transportation systems.
Higher taxes will help the government of President Dilma
Rousseff fatten state coffers after a rapid deterioration of
fiscal accounts due to an increase in public spending and a slew
of tax breaks for local businesses to boost the flagging
A rapid increase in spending by Brazilians traveling abroad
over the last few years has helped widen the country's current
account deficit sharply. The higher taxes will also be charged
on the purchase of foreign currency abroad and operations
involving pre-paid cards outside Brazil.
The finance ministry said in a statement that the move aims
to stop consumers using one payment method over others because
of tax benefits. Brazilians had been using travelers checks and
debit cards abroad instead of credit cards as transactions on
them paid a lower tax rate.
Traveling Brazilians usually come back home with several
suitcases filled with clothes, shoes and electronics, which are
much more expensive in Brazil than abroad partly because of the
high taxes charged on them.
The ministry said the IOF tax charged on the purchase of
foreign currency in the Brazilian market remains unchanged.