February 25, 2013 / 4:45 PM / 5 years ago

Brazil tax collection suggests improvement in state finances

* Tax revenues rise nearly 7 pct in January vs year ago

* Brazil plans more tax breaks to bolster economy

BRASILIA, Feb 25 (Reuters) - Brazil’s federal tax collection rose in January for a third consecutive month, suggesting state finances are improving at a time when the government plans to bolster spending to jolt a feeble economic recovery.

Federal tax revenues rose 6.59 percent in real terms in January compared with the same month last year to 116 billion reais ($58.8 billion), the federal tax authority said on Monday. Tax collection totaled 103 billion reais in December.

Tax collection slowed sharply last year due to a weaker economy and a slew of tax breaks that cost the government tens of billions of dollars in tax income. Federal tax collection rose a meager 0.70 percent in 2012 versus 2011.

President Dilma Rousseff’s government has said it will continue to slash taxes to help Brazilian businesses struggling with some of the world’s highest production costs.

An improvement in the state’s finances could expand the scope of future tax breaks despite calls for more fiscal restraint. The government has said it will prioritize economic growth over a closely-watched fiscal savings target that serves as an indicator of the country’s capacity to repay debt.

The head of the federal tax authority, Carlos Alberto Barreto, told reporters that the better results were mainly due to individuals and companies bringing forward the payment of their income and social contribution on profits taxes.

He declined to give an official estimate of tax revenue growth for 2013.

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