Brazil Governors Urge Lula to Stick to Pension Tax, Estado Says

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Brazil Governors Urge Lula to Stick to Pension Tax, Estado Says

Bloomberg News, May 9, 2003

Brasilia, May 9 (Bloomberg) -- Brazil's state governors are pressing President Luiz Inacio Lula da Silva to stick to his plan to tax retired civil servants, after his party said it would negotiate the proposal to get the pension bill passed in congress, the daily newspaper O Estado de S. Paulo reported.

Minas Gerais Governor Aecio Neves, from the rival Social Democracy Party, said the tax is a pledge Lula made to the 27 state governors and he must face the political cost of approving it, Estado said. The plan calls for all retired civil servants -- at a federal and state level -- who still receive a salary must pay an 11 percent tax on monthly pensions above 1,058 reais ($361), the paper said.

Opposition to the proposal is mounting as Lula tries to push his pension overhaul bill through congress, analysts said. Some ruling party legislators have said they'd rather leave the party than vote for the plan.