BRASILIA (Reuters) -Brazil’s Finance Ministry plans to raise the minimum cigarette price to offset losses from tax benefits granted to companies in some sectors and small municipalities, a government source told Reuters on Monday.
The hike is expected to be part of a package to compensate for nearly 26 billion reais ($5.03 billion) in revenue loss from the exemption of payroll taxes approved by Congress in December, the source said.
Brazilians now pay 5 reais for a pack of 20 cigarettes. A hike would boost federal tax revenue on the product.
Finance Minister Fernando Haddad said on Monday that measures to increase revenue are ready and the government is considering whether to send them to Congress this week or next via an executive order.
The plan was reported earlier on Monday by local newspaper O Estado de S. Paulo, which said the proposal would bring in 3 billion to 4 billion reais so other revenue sources would be needed to make up for the loss.
($1 = 5.1706 reais)
(Reporting by Bernardo Caram; Writing by Marcela Ayres and Andre Romani; Editing by Richard Chang)