Chidambaram Thursday announced a 3.0-percentage-point increase in the factory tax of SUVs to 30%.
In part, we still have a tax system that was designed for factory-heavy manufacturers.
Factory bosses in Manaus privately complain that benefits from tax breaks are largely offset by the suffocating effects of Suframa's huge bureaucracy.
Workers at Renault's car plant in Belgium have demonstrated at the European Commission against the closure of their factory, when it was their government's tax and social-security regime that sealed their fate.
Mr Magalhaes had pushed through Congress a measure to offer 700m reais a year in tax credits to Ford to build a new factory in Bahia, his home state.
Freer trade makes it much easier for companies to move to low-tax locations (it is not much good relocating your factory to Hungary if your goods face a 50% tariff going back to the home country).
His economic initiatives seem to be starting to bear fruit: Caterpillar, a heavy-equipment giant, said last month that new business-tax laws have persuaded it to add workers at an Indiana factory where it had previously cut jobs.
ECONOMIST: A close contest in a naturally conservative place
The firm's Chennai factory, one of its largest manufacturing facilities, has been raided by Indian tax officials.
Some critics note that Mr Magalhaes's sudden concern for the poor dates back to a row last month over the tax breaks and government loans offered to Ford to build a car factory in his home state, Bahia.
In December the government slapped a punitive tax increase of 30 percentage points on imports of cars whose makers lack a factory in Mercosur or Mexico.
That factory generates Canadian profits, on which the company gets to defer U.S. tax until those profits are repatriated to the United States. (It does have to pay corporate tax to Canada on a current basis.) But it gets to deduct the interest it pays on that bond issuance currently, against its American taxes instead of its Canadian taxes.
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