Brazil's Temer considers extending tax relief for steelmakers

BRASILIA (Reuters) - Brazilian President Michel Temer could extend a tax relief for steelmakers hurt by cheaper imports from China, even as the government wrestles to meet a budget deficit target for this year and next.

Speaking at an industry event in Brasilia, Temer said he will revisit options for the so-called Reintegra tax break programme with his economic policymakers. Currently, mills are eligible for a rebate equivalent to 2 percent of export revenues to compensate them for the burden of several domestic taxes.

Earlier this year, policymakers considered putting an end to Reintegra as a way to reduce a swelling budget deficit in the light of declining tax collections. During the government of Temer's predecessor, Dilma Rousseff, steelmakers were eligible for a bigger rebate - equal to 3 percent of export revenue.

"Difficulties, there are too many at this point and we all know that, but we're talking and ... let's see if there's room for a revision" of the current rate, Temer said.

His remarks underscore how politicians in Latin America's No. 1 economy are reluctant to end benign tax regimes to sectors with strong lobbying power. Temer's plan to raise borrowing costs on subsidized credit has been met with fierce resistance from businesses and opposition lawmakers, who earlier in the day blocked a vote on the matter.[nE4N1IY00X]

Temer said efforts to eliminate Brazil's budget gap before interest payments would require five to seven years, and not by the end of the decade. He reiterated his commitment to getting lawmakers to approve an overhaul of Brazil's pension and tax codes this year.

(Reporting by Lisandra Paraguassu; Writing by Guillermo Parra-Bernal; Editing by Leslie Adler)