Brazil reduces payroll tax breaks to cut swelling budget gap

The Brazilian government is reducing some of the payroll tax breaks it awarded companies in the past four years, the government's Official Gazette said on Friday, in a move aimed at reversing the country's widening budget gap. President Dilma Rousseff issued a decree that will increase social security levies that companies pay on their gross revenues.
The decision, published in the gazette, amounted to a reduction in corporate payroll taxes, was first approved in 2011 during Rousseff's first four-year term in office. Companies that paid 1 percent of social security contribution on their gross revenue will now have to pay a 2.5 percent levy. The rate for companies that previously paid 2 percent on the social security contributions was now increased to 4.5 percent. Finance Minister Joaquim Levy, a fiscal conservative who took office in January, has raised taxes and limit spending to meet the country's key fiscal savings goal.