Brazil bank chiefs balk at tax hike proposal, urge spending review
SAO PAULO, June 10 (Reuters) - The chief executives of some of Brazil's largest banks on Tuesday expressed concerns over government plans to raise taxes to meet the federal fiscal target, advocating instead for a review of public spending.
The proposed fiscal measures, which President Luiz Inacio Lula da Silva has yet to formally receive, include higher taxes on online betting, private credit instruments and financial institutions, while trimming a tax hike on the IOF financial transaction tax.
The government raised the IOF tax last month by decree, sparking backlash from Congress and the market.
Roberto Sallouti, CEO of investment bank BTG Pactual , said at an event hosted by banking federation Febraban in Sao Paulo that focusing on spending efficiency would be preferable to tax increases, which he argued would harm economic growth.
"Isn't it time to seek greater efficiency in Brazil's public budget spending?" Sallouti said, warning that increasing taxes would increase the cost of doing business in the nation.
Lula's administration has so far avoided putting spending cuts on the agenda and defended allocations toward sweeping benefits programs.
Marcelo Noronha, CEO of lender Bradesco , told the same panel that fiscal balance should be achieved through expenditure cuts, not revenue increases, and called for dialogue with policymakers.
Santander Brasil CEO Mario Leao acknowledged the difficulty of such decisions but stressed their necessity. "No one wakes up wanting to pay more in taxes, no one wakes up wanting to manage spending proactively, but these are agendas that Brazil has to face," Leao said.
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Mortgage advisor Aaron Strutt of Trinity Financial advises borrowers to not base decisions on mortgage rates falling in the near future. 'The number of people opting for two-year fixes in anticipation of cheaper borrowing costs has increased as the base rate and fixed rates are expected to get cheaper over the near term,' he said. 'Some of the big investment banks have been predicting some pretty significant base rate reductions, but personally, I wouldn't bet on it. 'While most borrowers are taking two-year fixes, opting for a three- or five-year fix isn't such a bad idea. 'Payment security is really important in these challenging economic times.' What does this mean for savers? The base rate affects how much interest savers can earn on their money. In general, savings rates rise when the base rate is rising, and fall when it is falling. 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'Expect one-year best-buys to fall to around the 4.25 per cent mark by the end of the summer if the base rate is cut in August.' > Best fixed-rate savings accounts: See the top deals in our independent tables What should savers do now? Savers should keep a keen eye on their savings rate, whether it is an easy-access account, fixed-rate account or an Isa. If your money is not working hard enough for you, move it to an account paying a better rate. Rachel Springall of rates scrutineer Moneyfacts Compare says: 'The savers who are worried rates will come down in the coming months may then wish to grab a top fixed deal for a guaranteed return.' 'Outside of fixed bond rates, there has been some competition across the fixed cash Isa top rate tables, now with new market-leading rates. 'Savers looking to protect their money from tax would do well to take advantage of their new Isa allowance if they have yet to do so. 'Loyalty does not pay so it comes down to savers to proactively review rates and switch their account if they are getting a poor return on their hard-earned cash.' Best savings rates and how to find them The best easy-access savings deals pay around 4.75 per cent. Atom Bank is offering a market-leading easy-access deal paying 4.75 per cent. Someone putting £10,000 in this account could expect to earn £475 in interest after a year, if the rate remains the same. Those with cash they won't immediately need over the next year or two should consider fixed-rate savings. The best one-year deal is offered by Cynergy Bank paying 4.5 per cent. A saver putting £10,000 in this account will earn a guaranteed £450 interest over one year. It comes with full protection under the Financial Services Compensation Scheme up to £85,000 per person. The best two-year bond pays 4.43 per cent and comes from Birmingham Bank. This provider also offers the best three-year bond which pays 4.47 per cent. Hampshire Trust Bank has a five-year bonds which pays 4.46 per cent. Savers should also strongly consider using a cash Isa to protect the interest they earn from being taxed. CMC Invest is currently offering a market-leading 5.44 per cent on its easy-access cash Isa for new customers. It includes a 0.85 per cent bonus for three months. After this the rate will revert to 4.59 per cent. Meanwhile, Trading 212* has a cash Isa paying 4.86 per cent with a 12-month bonus of 0.76 per cent. Best mortgage rates and how to find them Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs. That makes it even more important to search out the best possible rate for you and get good mortgage advice, whether you are a first-time buyer, home owner or buy-to-let landlord. > Mortgage rates calculator > Find the right mortgage for you To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C. This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit. You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes. If you're ready to find your next mortgage, why not use This is Money and L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you.
