Federal tax revenue falls 4,8% in May, to R$ 95 billion.

Wellton Máximo, from Agência Brasil - The decline in economic activity and tax breaks caused federal tax revenue to fall for the 14th consecutive month. In May, the government collected R$ 95,219 billion, 4,81% less than in the same month of 2015, after adjusting for official inflation as measured by the Broad National Consumer Price Index (IPCA). This amount is the lowest for the month since 2010 in inflation-adjusted terms.

In the first five months of the year, federal tax revenue totaled R$ 519,128 billion, also the lowest value for the period since 2010, after adjusting for inflation (IPCA). Compared to 2015, the real decrease (adjusted for inflation) reaches 7,36%.

According to the Federal Revenue Service, which released the figures, the economic downturn continues to be the main reason for the drop in tax revenue. Industrial production has accumulated a 10,79% decline in the first five months of the year, which is reflected in a real drop (adjusted for inflation) of 14,66% in the collection of the Tax on Industrialized Products (IPI) levied on domestic products from January to May.

Due to a 9,73% drop in the sale of goods, revenue from the Social Integration Program (PIS) and the Contribution to Social Security Financing (Cofins) has accumulated a real decrease of 6,66% in the first five months of the year. Because these taxes are levied on company revenue, they reflect consumer behavior.

The drop in corporate profits caused the collection of Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) to accumulate a real contraction of 5,75% from January to May. The 31,1% decline in the dollar value of imports caused the collection of Import Tax (II) and IPI on imported products to fall by 25,22% in 2016, discounting official inflation.

Due to a 4,88% growth in the wage bill, lower than the accumulated inflation of 9,28% over the last 12 months, social security revenue collection has accumulated a real decrease of 5,43% from January to May. Taking inflation into account, social security revenue fell by R$ 8,785 billion in the first five months of the year, the largest decrease in absolute terms among federal taxes.

Tax breaks implemented to stimulate consumption in recent years continue to impact federal coffers. From January to May, the federal government failed to collect R$ 37,748 billion due to tax reductions and exemptions. This revenue loss is less than the R$ 46,911 billion recorded in the same period last year. This is because some of the tax incentives were reversed throughout 2015, such as payroll tax exemptions, and taxes were reintroduced, such as the Contribution for Intervention in the Economic Domain (Cide), which is levied on fuels.