Brazil Scales Back Tax and Budget Proposal Ahead of Deadline

Brazil’s congress pulled back key revenue-raising provisions from tax legislation ahead of Wednesday’s deadline, narrowing the government’s room to balance its fiscal accounts next year.

The latest version drops a proposed 7.5% tax Real Estate Credit Notes, or LCIs, and Agribusiness Credit Notes, known as LCAs, both of which are currently exempt and widely used to fund housing and farm lending. Rapporteur Carlos Zarattini also removed higher taxation on betting operators, further shrinking the scope of the package.

The climbdown blows a hole in the government’s math: before the changes, the economic team had penciled in 20.6 billion reais ...