2023-05-31 21:04:30
© Reuters. Volkswagen vehicle yard, in Taubaté (SP) 07/19/2015 REUTERS/Paulo Whitaker
By Bernardo Caram
BRASILIA (Reuters) – Internal government studies on the program to encourage the automotive sector also include a discussion on a possible cut in the Tax on Financial Operations (IOF) which is levied on vehicle financing, the Secretary for Industrial Development at the Ministry of Development, Industry, Commerce and Services (MDIC), Uallace Moreira.
The measure to zero the tax and unlock loans is under evaluation, but the government has not yet taken a final decision, emphasized the secretary, emphasizing that the priority for lowering the cost of credit is the approval of the new framework of guarantees by the Senate — a project with proceedings that have been dragging on in Congress for over a year.
“What is guaranteed is (the reduction of) Pis/Cofins and IPI”, he said in an interview with Reuters on Wednesday. “We put the IOF in the discussion, but it hasn’t been hammered out yet.”
The IOF for vehicle financing has two distinct incidences, with a fixed rate of 0.38% on the total amount of the loan, in addition to an annual charge of 3% on the amount transacted. As it is a regulatory tax, an amendment to this tax does not require congressional approval or the adoption of compensation measures.
The government has been defending the one-off program to help vehicle assemblers with the argument that the sector is experiencing difficulties and has idle factories, while car financing has stalled in the face of high interest rates in the country.
“A policy of a structural nature cannot do without a policy of a conjuncture nature, because it is a basic short-term issue. If I ignore the short term, it could be so delicate that this productive sector may no longer exist tomorrow to think about structural issues”, stated Moreira.
Last week, the government announced the bases of the program to lower taxes on the sale of cars of up to 120,000 reais, with reductions from 1.53% to 10.96% in the consumer price, depending on energy efficiency, vehicle value and grade. of nationalization of production.
The initiative has not yet been put into practice because the Ministry of Finance has asked for time to prepare budgetary compensation for this revenue waiver.
Moreira stated that the program was announced before the measure was ready to “balance expectations” and dismantle narratives that there would be a reduction in technological components in cars or that the focus would be on popular vehicles. According to him, 13 factories already had some type of work stoppage, which put at risk a sector that generates 100,000 direct jobs and 1.2 million indirect jobs.
On another front, MDIC and Fazenda are preparing an accelerated depreciation program for the industry. The idea is to allow companies to immediately deduct investments in machinery and equipment from the tax calculation base.
“Our idea is to anticipate this benefit for companies, it’s not a tax waiver, it’s just a matter of tax flow. This change in flow can generate an investment effect”, he said, citing that the benefit would be valid from 2024.
UP TO ONE YEAR DURATION
The tax reduction program will reach 11 automakers installed in Brazil and 33 car models, encompassing 40% of the country’s market share.
According to the secretary, the final format of the program has not yet been closed, with scenarios for the duration of tax benefits ranging from three to twelve months, which will also influence the fiscal impact. He highlighted that there will not be a gradual transition at the end of the program and, therefore, the rates will immediately return to the previous level.
Moreira said that the government is also working to adjust Rota 2030, a program aimed at modernizing the country’s automotive sector. The idea is to stimulate innovation with a focus on decarbonization, including initiatives for fleet renewal.
“A new car, for example, emits around 12% to 15% less carbon than a car produced three years ago,” he said.
In the structural debate, the secretary said that the government intends to anticipate the announcement of its plan for what it calls “neo-industrialization”, with actions that will prioritize the development of new technologies and sustainable industry.
Discussions are carried out by technical groups of the National Council for Industrial Development (CNDI), made up of 20 ministers, which will have its first expanded meeting in June or July.
The initial forecast was that the announcement of the structural plan would be made in December of this year, but Moreira cited concern in accelerating this process in the midst of a continuous loss of space for Brazilian industry.
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