Brazil tax reform could include millionaires tax, says finance minister

BRASILIA (Reuters) -A millionaires tax is one of four scenarios being evaluated by Brazil's government to compensate for proposed tax exemptions for the lowest earners, Finance Minister Fernando Haddad said on Thursday.

President Luiz Inacio Lula da Silva has pledged to send an income tax reform to Congress, including a proposal to extend an income tax exemption to those earning up to 5,000 reais ($895.8) a month. The current upper limit for the exemption is 2,824 reais per month.

Haddad told journalists on Thursday that the reform must be "neutral," meaning measures aimed at increasing government tax revenues would have to compensate the effects of proposed exemptions.

Local newspaper Folha de S. Paulo first reported on Wednesday that the government was mulling the creation of a minimum tax on individual millionaires, which would be set between 12% and 15% of income.

Under the rules being discussed, according to the report , millionaires who currently do not pay the minimum percentage would have to contribute further until they reach the target.

Asked about the report, Haddad said that "it's one of the scenarios" under consideration.

The reform would be the government's latest change on taxes after Congress approved last year a major overhaul on consumption levies, although lawmakers still need to green light bills with regulations needed to implement the measures.

($1 = 5.5819 reais)

(Reporting by Victor Borges in Brasilia; Writing by Andre Romani; Editing by Leslie Adler, Brendan O'Boyle and Aurora Ellis)