June 27, 2013 / 11:11 PM / 4 years ago

UPDATE 1-Brazil trims tax breaks as fiscal focus sharpens

* Finance Minister Mantega says more tax incentives unlikely

* Stimulus for furniture, appliances phased out by September

By Luciana Otoni

BRASILIA, June 27 (Reuters) - Brazil’s focus on fiscal discipline means it cannot grant more tax breaks to bolster targeted industries, Finance Minister Guido Mantega said on Thursday, reinforcing a policy shift after a flurry of stimulus measures in the past two years.

Tax incentives on furniture and home appliances, for example, will begin shrinking next month and should disappear by September, Mantega announced at a press conference, adding that he did not expect additional stimulus of that kind.

“We don’t have the fiscal conditions to increase tax breaks at this point,” he said. His remarks highlighted an about-face for a government that had been rolling out new stimulus packages at a blistering pace until recently, when concerns about public accounts gathered steam among investors.

President Dilma Rousseff first offered the tax incentives on refrigerators and washing machines in December 2011 to jumpstart consumption in the face of an economic slowdown. Late last year, the government said the so-called IPI tax on white goods would slowly return to its original level at the end of June.

Economists have questioned the effectiveness of such targeted measures, which have not yielded the rebound officials promised. Criticism has only increased as the government resorted to unconventional accounting to hit its fiscal targets.

Standard & Poor’s revised its outlook on long-term ratings for Brazil’s sovereign debt this month to negative from stable, citing a deteriorating fiscal outlook and slow economic growth.

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