RIO DE JANEIRO, Sept 18 (Reuters) - August tax receipts by Brazil's federal government were the lowest in five years, the country's tax authorities said on Friday, as the worst economic downturn since the 1930s reduced taxable activity.
Tax collection in the month fell 9.32 percent compared with a year earlier to 93.7 billion reais ($23.8 billion), the biggest year-on-year decline so far this year.
Brazil's government has been struggling to cut spending and raise taxes sufficiently to close a budget shortfall and convince ratings agencies that its debt, essential to maintaining government spending, should receive an investment-grade rating.
"This is very bad news for efforts to impose 'fiscal austerity,' said David Fleischer, a Brasilia political risk analyst, in his Brazil Focus report on Friday. "With the recession deepening, increasing taxes becomes more difficult."
On Sept 9, Standard & Poor's cut Brazil's rating to speculative grade or "junk". On Tuesday the government of President Dilma Rousseff put together a package of 65 billion reais in taxes and budget cuts in hopes of averting a downgrade from other agencies.
When inflation was accounted for, the decline was 0.68 percent, the first such inflation-adjusted tax collection drop in 2015.
The government said the tax collection decline was exacerbated by one-time tax gains a year earlier when companies paid 7.13 billion reais in disputed taxes after the government eased payment terms. Similar payments only accounted for 2.25 billion reais this year.
Without the one time receipts last year, August 2015 tax revenue would have been 4.26 percent lower, still a bad result, Fleisher said.
$1 = 3.94 Brazilian reais Reporting by Marcela Ayres and Jeb Blount; Writing by Jeb Blount; Editing by Ken Wills