The Brazilian government has extended a tax cut on new vehicle purchases until the end of October 2012, according to Finance Minister Guido Mantega. Tax cuts on new vehicles have helped induce sales and spike growth in the country. It was originally set to expire on August 31, 2012. The Brazilian government likewise extended the tax cuts on the purchases of washing machines, stoves and other home appliances to the end of 2012, Mantega disclosed.
The Brazilian government, headed by President Dilma Rousseff, cut the so-called IPI tax for cars in May 2012, helping to drive up vehicle sales from 257,887 units in April to 364,196 in July, according to figures from the national carmakers association Anfavea.
On the other hand, sales of cars, motorcycles and auto parts posted a 19.8 percent year-on-year increase in June. The central bank's economic activity index rose by 0.75 percent in June, the fastest pace in 15 months, as a result of the 500 basis points in interest rate cuts over 2011 and other efforts to spur economic growth. According to the median estimate of 50 analysts surveyed by Bloomberg, Brazil's gross domestic product probably rose 0.5 percent in the second quarter, after growing 0.2 percent in the January-March period.