WASHINGTON - The tax exemption for the interest paid on all municipal bonds will cost the federal government an estimated $35 billion in fiscal 2009 and will rise to $39.4 billion in fiscal 2013, according to President Bush's fiscal 2009 budget.

That represents a 12.6% rise over five fiscal years - about the same increase estimated last year for the comparable fiscal 2007 through 2012 period. Still, the new estimates show that the cost of the tax exemption for public-purpose and private-activity tax-exempt bonds in fiscal 2009 will be $5.6 billion less than the $40.6 billion forecast for fiscal 2009 in last year's projections.

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