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Last Updated: Thursday, 1 May, 2003, 06:57 GMT 07:57 UK
Lula pushes Brazil reforms
Brazilian President Luiz Inacio Lula da Silva
Lula's walk to Congress was interrupted by demonstrators

Brazilian President Luiz Inacio Lula da Silva has personally delivered his plans for a radical shakeup of tax and pensions to the country's Congress.

The plan is likely to face stiff opposition from within Lula's own Workers' Party, which spent most of the past eight years blocking reform plans put forward by the previous government.

But now the administration's argument is that Brazil cannot afford a pension system which last year cost 4.3% of gross domestic product, or 56bn reais ($19bn; 12bn).

And Lula contends that far from betraying the poor, as some have accused him of doing, his changes will ensure that left-wing governments retain a foothold in Latin America after years of laissez-faire governments in most countries in the region.

"These reforms are not to benefit some and hurt others," Lula told a joint session of Congress.

"They are for us to see if we can transform our nation into a deeloped country that conquers the place it should have already occupied in this globalised world."

A great divide

His contention that Brazil's nascent economic recovery is doomed without top-to-bottom reform is falling on deaf ears in some quarters.

Leftwing protesters - who almost certainly voted for him in December's landslide poll victory - yelled abuse at the President and his wife as they walked through the capital, Brasilia, towards Congress.

They are deeply unhappy with the idea of raising the retirement age by as much as seven years, capping public sector pensions and imposing a uniform sales tax across Brazil's 27 states.

But there is little doubt that the current system is unsustainable, threatening attempts to shrink Brazil's $250bn debt mountain.

The BBC's correspondent in Sao Paulo, Tom Gibb, said many senior public sector workers - professors, politicians and judges, for instance - collect several pensions.

And even under normal circumstances, many public sector workers retire on pensions higher than their final salary.

The private sector, meanwhile, often pays little more than a pittance, exacerbating the massive inequalities between rich and poor in Brazil's society and effectively subsidising the public sector.

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