2023-08-18 21:55:46
© Reuters
BRASILIA (Reuters) – The extraordinary secretary for Tax Reform, Bernard Appy, said on Friday that the government’s idea is to discuss possible changes to reduce taxation on payroll along with the reform of the income tax.
“The payroll tax reform, most likely, is done in order to reduce taxation, but this needs to be compensated, because we are in a fiscal situation that does not allow you to have tax waivers, at least in the short term. Hence the idea to discuss it along with the income tax reform”, said Appy in an interview with Exame magazine.
According to him, the cost of an eventual relief for payroll taxes cannot be offset by an increase in the tax burden on consumption, which already suffers an incidence seen as high.
Appy noted that some propose the reinstatement of the Provisional Contribution on Financial Transactions (CPMF) as a way to enable exemption, but that the government does not discuss this possibility.
“I cannot increase consumption taxation to relieve payroll. The government does not want a CPMF, because it does not think that the CPMF is a good tax. So, what is left in fact is income taxation to be able to have this joint discussion with payroll taxation”, he said.
Despite not estimating a date for sending the proposals to the National Congress, since the government has not yet finalized the elaboration of the articles, Appy pointed out that most of the proposals should only be presented after the approval of the tax reform.
The payroll exemption in force would expire at the end of this year, but in June the Senate Economic Affairs Committee approved, in a terminative character, a four-year extension for 17 sectors of the economy.
REGULATION
The secretary also said that the tax reform on consumption should be approved by Congress at the end of this year, or if possible before, and that the regulation should be done through more than one bill, with the government estimating that they will be sent to Congress in February 2024.
Appy stated that the economic team is already working on the preparation of regulatory proposals, which will cover five main topics. He predicted that more than one project will be sent to Congress, possibly two, measures that will need to be approved by the first half of 2025.
“We are already working on the elaboration of the projects, for the time being in the federal government, but we are already calling states and municipalities to participate in the discussion with us. There is already a lot of work done. This is the expectation (that they will be approved next year )”, he stated.
The five general topics to be regulated, according to Appy, are the Tax on Goods and Services and the Contribution on Goods and Services; the Selective Tax; the Federal Council; the Regional Development Fund and reimbursement of companies with accumulated credit balances of the Tax on Circulation of Goods and Services (ICMS).
(By Victor Borges)
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