Brazil Logs Record August Tax Revenue as Collections Climb 8.25%

Brazil's federal tax revenue climbed 8.25% in real terms in August compared with the same month a year earlier, reaching 235.57 billion reais (about $45.95 billion), official data released on Tuesday showed.

The figure is the highest ever recorded for August in the tax revenue service's series, which stretches back to 1995. It extends a pattern seen throughout the year, with collections having set records in each month so far.

On a cumulative basis, revenue for the year to date is up 7.12% in real terms, also a record for the series.

The stronger intake has been central to the fiscal strategy of President Luiz Inacio Lula da Silva's government, which has leaned heavily on improved revenue collection to shore up public accounts and narrow the budget gap. Even so, an effective primary deficit is still projected for the year once all public expenditures are counted.

According to the tax revenue service, the August result was driven in part by higher collection of taxes tied to corporate profits. It also pointed to firmer social security contributions, reflecting growth in the real wage bill and the phased withdrawal of payroll tax breaks under the Lula administration.

Revenue from capital income recorded robust growth as well, the agency said, helped by stronger collection from fixed-income investments and dividends. Such dividend gains had been exempt from taxation until last year.