Brazil's federal tax revenue posts another strong performance in October

BRASILIA (Reuters) - Brazil recorded another month of strong growth in federal tax revenue in October, data from the tax revenue service showed on Thursday.

Collections reached 247.92 billion reais ($42.58 billion), representing a 9.77% real increase compared to the same month a year earlier.

Year-to-date, tax revenue saw a real increase of 9.69% over the same period last year, driven by factors such as legal changes to the taxation of exclusive investment funds and the reinstatement of a federal fuel tax.

Higher revenue from imported goods has also supported collection, reflecting stronger-than-expected economic performance and an increased average tax rate, according to the federal revenue service.

The government of leftist President Luiz Inacio Lula da Silva is relying heavily on higher revenues to meet this year's fiscal target of eliminating the primary deficit, with a tolerance margin of 0.25% of GDP in either direction.

However, with mandatory spending rising rapidly, Lula's administration has pledged structural measures to address expenditures, aiming to ensure the long-term sustainability of a fiscal framework that ties primary balance targets to a cap on overall spending growth.

According to Chief of Staff Rui Costa, drafting of a highly anticipated fiscal package is expected to be finalized this week, though Lula must still decide on its details and the timing of its announcement.

($1 = 5.8228 reais)

(Reporting by Marcela Ayres; Editing by Andrea Ricci)

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