Brazil’s Congress poised to create new climate tax

Brazil’s lower house of Congress is considering a new initiative that would include specific legislation to combat climate change in an existing tax reform bill. A source with direct knowledge of the draft reform said the specifics of the bill, which would levy selective taxes on environmentally harmful activities, are still being discussed by President Luiz Inácio Lula da Silva’s team, the private sector, and local governments.

Earlier this month, Tax Reform Secretary Bernard Appy said the government was also considering a carbon tax.

The proposal comes as the government struggles to introduce meaningful legislation to regulate carbon markets, a priority for officials within the Lula administration — notably Environment Minister Marina Silva and Rodrigo Agostinho, the head of Brazil’s environmental protection agency Ibama. In a recent interview with the financial newspaper Valor, Ana Toni, Ms. Silva’s top climate advisor, said that tax reform would be central to Brazil’s climate policy.

Mr. Lula’s fragile coalition in Congress makes it difficult to pass legislation. One seasoned lawmaker said he’d never seen such a struggle to form a majority. For most lawmakers, the Lula administration has yet to get off the ground and has little to show for its nearly...