ANALYSIS: Measures to make cars cheaper are positive, but there is still a lack of clarity on the fiscal side
Ministry of Finance will have 15 days to adapt proposals to fiscal rules; experts warn that tax cuts may burden other segments. Measures to make popular cars cheaper bring back concerns about the fiscal situation, say analysts Fábio Tito/g1 , once again raised concerns about possible impacts on the Brazilian fiscal situation. Among the government’s main proposals are: Tax cut to reduce the final price of a car up to R$ 120,000 by up to 10.79%; Adoption of the reference rate (TR) as an interest rate for research and innovation projects; R$ 4 billion in financing in dollars from the National Bank for Economic and Sustainable Development (BNDES), aimed at companies that work with exports. On the one hand, experts say, the measures are important to warm up a sector that has been moving at a pace well below capacity and projections for the year. Data from the National Association of Automotive Vehicle Manufacturers (Anfavea), for example, point out that at least 13 factory stoppages took place this year – which, to a large extent, reflects the impacts of high interest rates and reduced demand. See how the government’s measure to reduce car prices will work On the other hand, however, the reading is that there is still a lack of clarity about how this would impact the Brazilian fiscal situation. There are doubts, for example, about where the resources will come from for the government to be able to compensate for the loss of revenue with the tax cut, and what would still be possible in view of the approval of the tax reform. In addition, experts indicate that even with the reduction in the final price of cars and the eventual creation of guarantees or a specific credit line for retailers – a possibility that had been aired, but which has not yet been announced by the government –, the impacts for the final consumer would still be quite limited. Government announces tax cut with the aim of reducing the price of popular cars Understand below what the sector says and what the market reads. What does the industry say? After a meeting at the Planalto Palace with government representatives, the president of Anfavea, Márcio Lima Leite, said that the package of measures announced by vice president Geraldo Alckmin this Thursday afternoon makes it “very possible” that new cars will return to production. cost less than R$ 60,000 at dealerships. According to Leite, although each automaker has its own pricing policy, the numbers that have been presented are positive and may lower the value of these vehicles. “Today, with the tax reductions that are under discussion and the joint effort of the entire sector, it is quite possible that we will have [queda nos preços]. But this is an issue that each automaker, each manufacturer, has its own policy, ”he said. In addition to the tax cut, however, the segment still defends better interest rates. In this case, in his speech, Alckmin even stated that he believes that with the improvement of the fiscal regime and with the approval of the new framework, the trend is that there will be more space for the Central Bank to start the cycle of cutting the basic interest rate . According to the president of the National Association of Financial Companies for Automakers (Anef), Paulo Noman, automaker banks have become a “financing industry that is no longer financing”. “Most cars are now being sold in cash and not only because of the price of the car, but also because of the weight of interest in installments for the consumer. The industry cannot subsidize interest for its customers forever”, says Noman. sector executives point out that the measures can already bring an improvement in the segment’s sales volume, reducing the cost for automakers and, consequently, improving the price of cars. “A reduction in interest rates is something very desirable for the future […], but any measure that will reduce costs and improve conditions for consumer access to the segment is already positive”, says Toyota do Brasil director of government relations and regulation, Roberto Braun. The director of Toyota reinforces, still, that the company evaluates the possibility and is interested in offering a vehicle with more popular prices. Currently, the company’s entry-level car is the Yaris, which costs around R$97,000. An eye on the tax In spite of the positive reading of the government’s proposals, specialists still highlight the need for more clarity on the fiscal aspects of the proposal. As announced by Alckmin, the Ministry of Finance will have a period of 15 days to adapt the decision to the fiscal rules – that is, calculate the loss of collection and say what the compensation will be in the budget. After that period, according to Alckmin, the government will issue a provisional measure and a decree to regulate the issue. For the chief economist at Austin Rating, Alex Agostini, however, the expectation is that the government will have difficulties in overcoming this issue without spilling over into other sectors. “The current fiscal situation does not allow the government to give up resources, so the solution tends to be to carry out a tax rearrangement. In this case, the tendency is for this tax reduction in the automotive sector to end up burdening other segments and products, perhaps cigarettes and beverages, for example. The government has nowhere to take it from, so the solution is to relocate it, ”he says. Experts also say that the government’s “spendthrift profile” could also end up having an opposite effect on interest rates – since part of what the BC needs to reduce rates also starts with greater fiscal certainty. “If the market does not feel that this government is credible, if the signs indicate that there will be no change in the status of public accounts, interest rates will not fall”, says professor of economic sciences at Faculdade Presbiteriana Mackenzie Rubens Moura. On the demand side, the perception is that new measures will need to be taken so that the objective of heating up the sector is, in fact, achieved. “It’s not just a drop in the price that demand will rekindle, because the big problem is that this demand doesn’t exist today. We have an extremely high level of household indebtedness and, even if there is a reduction in the Selic rate in the second half, at the end the impact is much smaller”, explains Agostini. “It is an important sector, but these measures are provisional due to the current situation of the economy. We are not in fiscal balance and we are not accelerating, so I believe that the efficiency of these proposals must be very limited”, adds the economist.