Announcement by the President of the increase in the tax on financial operations and the decrease in the income tax rate were disregarded by head of the Civil house
Mohamed Mansoor
Bolsonaro Government, Day 4: Disfound tax announcements. The phrase summarizes the first public headbeats between the president and the economic team, which culminated with the word of the chief Minister of the Civil House Onyx Lorenzoni, revealing the first major mismatch of the new management. The noise happened on Friday morning after Jair Bolsonaro stated that the Minister of Economics, Paulo Guedes, would announce “the possibility of decreasing” the maximum rate of income tax, which reaches the highest wages. At the same time, Bolsonaro also announced that the tax rate of financial operations (IOF) would be high to compensate for the extension of tax benefits to the north and Northeast regions. The president’s statements were, however, disallowed throughout the day and called “Confusion” and “misconceptions” by the Secretary of the IRS, Marcos Cintra, and Onyx.
In the face of the panorama, the superminister of economics, Paulo Guedes, who had already seen the President defend a pension reform more lenient than he desired, unmarked the public commitments. He preferred the silence. The chief minister of the Civil House, however, spoke in his name to disprove the announcements of the representative. “Paulo Guedes taught me that, before (decreasing taxes, we need to get out of this hole of 139 billion,” he said, citing the deficit of public accounts.
It all began in the event of the command exchange of aeronautics, on the morning of this Friday, Bolsonaro stated that he had signed a decree that raised the IOF since he sanctioned the law that extended until 2023 the tax incentive granted to companies in the areas of the Superintendence Development of the Amazon (Sudam) and the Northeast Development Superintendence (Sudene). “It was signed decree in this direction (elevation of IOF), but for those who have applications out there, to be able to fulfill a requirement of the project approved as a bomb-agenda, against our will,” said the president to journalists.
A few hours after the speech of Bolsonaro, the special secretary of the IRS, Marcos Cintra, stated, however, that there would be no increase in the IOF. [Bolsonaro]”Must have made some confusion. No need for any compensation. There are resources foreseen in the budget law of 2019 for enlargement, “he said. Cintra also stressed that tax changes would come later, “in the right time.”
At the end of the day, it was the turn of the minister of the Civil House, Onyx Lorenzoni, to call a press conference at the Palácio do Planalto to go back in the announcement of the president. According to Onyx, Bolsonaro was “mistaken” in announcing that there would be an increase in IOF. Regarding the reduction of the income tax, also announced by the president and dismissed by Cintra, the minister of the Civil House said it is a “thesis that comes from the campaign”, but that should be dealt with only after the government manages to balance the public accounts.
“We have a premise that is to get the fiscal balance. We have for this year an anticipated primary deficit of 139 million, of course we cannot at this time do any action that may result in reduced storage. ” The government’s promise is to get a primary surplus in two years.
In the evaluation of The Economist André Perfeito, from the broker Necton, the mismatch between the speeches of Bolsonaro and Onyx opens a relevant noise in the conduction of economic policy. “The proposals to reduce the IR and increase the IOF sound improvised as it does not make clear the amount to be raised and whether it is relevant to solve short-term challenges. Communication in a fit of the Orthodox type is crucial since it is in the field of expectations that the anchoring of important aspects, such as long-term interest, is being operated on, “he said.
Increased regressiveness
For the National Federation of State and District Fisco, the announcement made president, now played for future, regarding the reduction of income tax rate (which would fall from the current 27.5% to 25%) is unconstitutional, because it is contrary to the criterion of Progressiveness established in paragraph 2 of Article 153 of the Federal constitution. According to the President of the entity, Charles Alcantara, the measure is doubly mistaken, from a fiscal point of view and from the point of view of tax justice, because it increases the regressiveness of the tax system and further expands the abyss between rich and poor, once Which decreased taxes only for those with greater purchasing power.
“Whoever earns the most must pay more taxes, who earns less, must pay less. This measure announced by the new government will favor a part of the population, but leaves out many Brazilians who earn up to two minimum wages, which is a mistake and favors inequality, “says Alcantra in a note
Currently, the Brazilian average income is 2000 reais per month. The change announced by Bolsonaro would reduce the rate for those with monthly income above 4,664.68 reais, from the current 27.5%, to 25%.
