Brazil cuts taxes in face of economic downturn

Brasilia, March 31 (DPA) The Brazilian government enacted additional tax cuts Monday in the face of shrinking forecasts for gross domestic product (GDP) amid the global economic downturn.

The move came after the country's central bank Monday reduced its economic outlook for GDP to 1.2 percent for the year from 3.2 percent.

Finance Minister Guido Mantega announced a reduction of taxes on building materials and an extension of a tax break on cars. The government hopes to make up for the expected tax shortfall by increasing cigarette taxes to 30 percent.

According to the Banco Central, the industrial sector has been hardest hit by declining demand - with forecast growth of 0.1 percent instead of 3.4 percent. The bank also predicted inflation of 4 percent, revised downward from 4.7 percent.

'I would be satisfied if we had growth this year of 1 or 2 percent,' Mantega said in announcing the tax moves in Sao Paulo. As recently as December, the government said a growth rate of 4 percent was possible.