Lula Government Concerned Over Potential Defeat of 'Blusinhas' Tax Measure

The Lula government is closely monitoring negotiations regarding a provisional measure (MP) that eliminated the so called blusinhas tax. The Palácio do Planalto has detected strong lobbying from business and trade sectors aimed at preventing the MP from being voted on before it expires on September 8. If the measure is not approved, the tax will be reinstated less than a month before the first round of elections, a scenario viewed as disastrous for the president's popularity. Concerns have grown due to difficulties in forming a special commission to analyze the measure because of a lack of agreement on its composition. The blusinhas tax, which imposed a 20 percent tax on purchases up to 50 US dollars, was originally created with support from the Ministry of Finance and the retail sector to combat unfair competition from foreign e commerce sites, particularly those from China. Due to the unpopularity of the charge, the Lula government issued the MP to reverse the tax, though it requires Congressional approval to remain in effect.