Brazil tax reform jolted as key Economy Ministry official is fired

Marcos Cintra, special secretary to Brazil's federal revenue service and a key figure at the helm of the government's plans to reform the country's complex tax system, was fired on Wednesday, government sources told Reuters.

By Marcela Ayres and Jamie McGeever

BRASILIA, Sept 11 (Reuters) - Marcos Cintra, special secretary to Brazil's federal revenue service and a key figure at the helm of the government's plans to reform the country's complex tax system, was fired on Wednesday, government sources told Reuters.

Cintra's departure, confirmed in a statement from the Economy Ministry, comes a day after local media reported a senior member of Cintra's team outlining details of a financial transactions tax modeled on the unpopular "CPMF" tax introduced in 1993 but abolished in 2007.

"The economic team is working on a new tax regime to simplify standards, reduce costs, lighten the tax burden on households and business," the Economy Ministry said in its statement.

"The proposal will only be released after the approval of (Economy) Minister Paulo Guedes and President Jair Bolsonaro," it said, adding that Guedes thanked Cintra for his service and that Jose de Assis Ferraz will temporarily assume the position.

One source told Reuters that Guedes decided Cintra should be dismissed because he had not fully drafted his tax reform proposal while still speaking about the issue in public, and he never appeared in front of lawmakers.

Local media said Cintra's dismissal centered on the debate over proposals to introduce a new version of the controversial CPMF tax. On Tuesday, a senior member of his team was reported as saying it would be levied at a rate of 0.2%-0.4%.

Guedes and its supporters argue that a financial transaction tax is a simple tax to implement and collect, and provides a steady revenue stream for the government.

But critics, from across the political and economic spectrum, say it is regressive and hits the poor hardest. The CPMF, which taxed all financial transactions including checks, was unpopular when it was in place, and opposition to it being resurrected in any form runs deep still.

Tax reform is the government's main economic priority in the second half of this year, after it pushed social security reform to the brink of full Congressional approval in the first half.

(Reporting by Jamie McGeever, Marcela Ayres and Lisandra Paraguassu Editing by Chizu Nomiyama and David Gregorio)

((jamie.mcgeever@thomsonreuters.com; +55 (0)11 97189 3169; Reuters Messaging: jamie.mcgeever.reuters.com@reuters.net))

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