the announcement of the Minister of Finance Fernando haddad The fact that Brazil will reduce taxes on the lowest incomes and establish a minimum rate on the highest incomes has led the real to unprecedented weakness against the dollar.
Haddad announced this Wednesday that the personal income tax (personal income tax) exemption band will be adjusted 5,000 reais (around 800 euros) to benefit 26 million people. Ten million taxpayers will be exempt and another 16 million will pay less.
The person responsible for the Brazilian economy, the ninth largest GDP in the world, He also revealed that his government will create a 10% minimum tax for those who earn more than 50,000 reais a month (around 8,000 euros), which will affect 100,000 people.
The markets had already greeted the announcements with skepticism in the previous hours and the real devalued to reach 6.11 per dollar this Friday, a parity never seen in the 30 years of life of the Brazilian currency. Before the announcement, the real was trading at 5.89.
“The news that an exemption from personal income tax would be included in the package of measures for those who earn up to 5 thousand reais have made markets wary of funding sources pay for this onerous measure and pushed investors to run for the dollar”, underlined ”O Globo”.
At the same time, the economy delivered good news: the unemployment rate, at 6.2%, is at the lowest level as it began to be measured.
local economic analysts expect more details in the coming days, as they generally doubt the government’s ability to meet the 70 billion reais (11.2 billion euros) of savings promised by the Treasury chief over the next two years.
The measures announced by haddad also include the restriction of the payment of salary bonuses to workers earning up to 1.5 times the minimum wage, changes to military pension rules and a ban on tax benefits in case of primary deficit.
Haddad is mentioned as a potential candidate to succeed Luiz Inacio Lula da Silva in the 2026 elections The minister has already lost the 2018 elections against jair Bolsonaro, but he is one of the senior officials best regarded by the president, who will already be 81 years old at the time of those elections. Lula, three times president, has not categorically ruled out a new appointment, even if today it seems much less likely than some time ago.
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