No Extension On Brazil Auto Tax Incentive -Finance Minister
June 08 2009 - 1:47PM
Dow Jones News
The Brazilian government has no intention to extend a tax break
to auto makers again this month after doing so in March, Finance
Minister Guido Mantega said Monday.
"The (tax break) ends this month. If you are thinking about
buying a car, now is the time because prices are still reduced," he
said to journalists after an interview with Globo News in Brasilia,
the nation's capital.
Brazilian car sales have been on the upswing since January
thanks to a temporary industrial production tax exemption. The move
resulted in new car prices around 7.5% lower than normal. The tax
break was extended in late March from its April 1 deadline and now
will expire on June 30, Mantega said.
Industry leaders like Jackson Schneider of the Brazilian Motor
Vehicles Manufacturing Association, or Anfavea, said the sector
already expects a steep decline in sales once the tax break
expires.
Last week, General Motors do Brasil chief executive, Jaime
Ardila, hinted that industry executives would lobby the government
in favor of a more gradual tax increase as the country is
technically in a recession.
Brazil sold 1.15 million cars from January to May 31, down 0.1%
from the year ago period. Car sales have managed to perform better
than expected because of the tax break. Last year was a record
breaking year for Brazilian car sales, selling close to 3 million
vehicles.
-By Kenneth Rapoza, Dow Jones Newswires, 5511-2847-4541,
kenneth.rapoza@dowjones.com