Brazil markets slide, eyeing tax breaks ahead of minister's address
Recasts throughout
By Marcela Ayres
BRASILIA, Nov 27 (Reuters) -Brazilian markets slipped on Wednesday ahead of a televised address by Finance Minister Fernando Haddad, amid expectations that the government would announce income tax exemptions to offset dissatisfaction with anticipated spending cuts.
The Finance Ministry said Haddad will deliver his address at 8:30 p.m. local time (2330 GMT), focusing on "efficient government" and building a "fair country."
A source familiar with the matter said on the condition of anonymity that the minister is expected to announce an income tax exemption for individuals earning up to 5,000 reais ($850) per month, up from the current threshold of 2,824 reais.
The measure, which experts estimate could have a fiscal impact of up to 100 billion reais depending on its scope, fulfills a campaign promise by leftist President Luiz Inacio Lula da Silva.
Labor Minister Luiz Marinho said the full package of fiscal measures is expected to be unveiled on Thursday morning.
The Finance Ministry did not immediately respond to requests for comment.
Local newspaper O Globo first reported that the tax exemption would be addressed in Haddad's speech.
The Brazilian real weakened more than 1% against the U.S. dollar in spot trading following the report, while the local benchmark stock index, Bovespa .BVSP, slid 1.4%.
Market expectations had centered on measures to curb mandatory spending growth, particularly after Haddad himself suggested debate on the tax exemption would likely be postponed until next year.
Investors have been watching eagerly for government measures to control the growth of public spending, amid concerns that the government has not done enough to deliver on new fiscal passed under Lula last year to rein in the growth of public debt.
A government official, speaking on condition of anonymity, expressed disappointment over the inclusion of the tax exemption in Wednesday's speech, warning it could overshadow new spending controls and hinder negotiations in Congress over the broader fiscal package.
Reporting by Marcela Ayres; Editing by Brad Haynes, Chizu Nomiyama and Alistair Bell
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