Brazil will next month increase taxes on fuel and loans to individuals and adjust other duties to help plug the government's yawning budget deficit.
New finance minister Joaquim Levy announced the measures on the eve of a visit to the World Economic Forum in Davos, during which he will seek to convince investors that Latin America's biggest economy is setting its finances back on track.
"The increase in revenue due to the above measures is expected to be R$20.63bn in 2015," the finance ministry said in a statement.
Brazil's President Dilma Rousseff is battling to prevent a downgrade of Brazil's prized investment grade credit rating after her government embarked on a prolonged fiscal stimulus programme during her first term in office.
After narrowly winning re-election in October, she appointed fiscal hawk Mr Levy, a former treasury secretary and private sector fund manager, to implement an austerity programme.
Mr Levy, who took over as finance minister this month, has pledged to restore the primary fiscal surplus to 1.2 per cent of gross domestic product this year and at least 2 per cent next year through tax rises and spending cuts.
On Monday, he said the financial transaction tax on credit to individuals would be raised to 3 per cent from 1.5 per cent.
Taxes on petrol, meanwhile, would be increased by R$0.22 per litre and for diesel by R$0.15 per litre.
He did not provide figures for what percentage increase this would represent.
But in Sao Paulo the taxes would raise the price of petrol at the fuel pump by about 8.5 per cent and diesel by about 6.25 per cent, according to a survey of petrol station prices on the website of Brazil's fuel industry regulator, the National Agency of Oil, Natural Gas and Biocombustibles.
Mr Levy's efforts to control fiscal spending come as the central bank is also raising interest rates to combat persistent inflation, with the consumer price index finishing last year near the top of the official target range of 6.5 per cent.
Both moves have been welcomed by the market following years in which the central government has been accused of fuelling inflation by engaging in stimulus measures even as the central bank has tried to control prices through monetary policy.
"The government has started the process of making the needed adjustments, announcing measures to improve the fiscal picture and reduce lags in regulated prices," Itau-Unibanco economist Ilan Goldfajn said in a research note. "These measures are necessary and welcome".
But he warned the adjustment was likely to be deeper than anticipated given a sluggish economy that is hurting government revenue.
The economy could weaken even more this year and inflation rise given a drought in southeast Brazil that is threatening to raise the cost of electricity.
On Monday, eight Brazilian states suffered partial power outages as soaring summer temperatures led to an overload of the system.
(Financial Times)
