Brazilian Finance Minister Guido Mantega has revealed the government's intentions to begin taxing savings accounts of more than BRL50,000 (USD24,000) from 2010.
It is believed that the move - which has yet to gain approval from Congress - will deal with the consequences of lower interest rates and maintain demand for government bonds.
If the proposal is approved, Mr Mantega explained that the government plans to levy a progressive tax rate on income from these accounts, starting at 20%, but possibly rising as high as 80%. The tax-exempt accounts pay a statutory rate of interest which will soon be higher than market rates.
The measure will only take effect if Brazil's Selic (annual basic interest rate) drops below 10.5%.
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