Cashback from the basic basket can be paid to everyone, says Appy – 05/12/2023 – Market

The Secretary of Tax Reform at the Ministry of Finance, Bernard Appy, said that the government is evaluating the possibility of refunding the tax on basic foodstuffs for the entire Brazilian population.

This refund, in the “cashback” model, would be full for the poorest and partial for the richest. For this, a limit of value to be returned per family would be created.

The proposal still under analysis is to change the tax benefit for food. Instead of exempting the basket in the same percentage for all Brazilians, the government collects these taxes and returns the money benefiting the poorest.

In the design under study, the return would be made in real time, “at the cashier’s mouth”, said the secretary.

“The government never said that the cashback will be limited to the public of the Single Registry of social programs. Quite the contrary. It is not defined how it will be, but we are evaluating the possibility of taking, at the limit, the entire Brazilian population”, said Appy during an event held by Abras (Brazilian Association of Supermarkets).

The entity’s president, João Galassi, said he was against the mechanism. “Cashback is impossible. For us it is unfeasible. It is something we do not agree with. Due to the cost, including the cost of implementation,” he said at the beginning of the debate.

After Appy’s response, Galassi said that this is a very intense discussion within the entity, which is convinced that cashback will be a problem. According to him, the association could even discuss the possibility of a partial exemption from the basket added to the cashback mechanism, noting that there is no sign that this will be the path.

The secretary of the Ministry of Finance said that the cashback would have a positive effect on the demand for food. The increase in cost for the richest families does not reduce the demand, but the increase in the income of the poorest raises the demand for food.

“The final effect of the cashback, vis-a-vis a basic basket exemption mechanism that has the same cost, is actually more positive from the social point of view and food demand”, said Appy.

Experts point out two advantages in relation to tax refunds. The first is that part of the exemption was not passed on to the consumer, that is, it remained with producers or companies in the production chain. In addition, the tax reduction benefits the richest, who spend more on food in absolute terms.

“If you take the same value that you would have with the exemption of the basic basket and reallocate it to the entire Brazilian population, returning the tax up to a certain limit equal in per capita values, the fact is that the refund would be greater than the exemption of the basket for the poorer families,” said Appy.

The position in favor of devolution was expressed by OECD representatives during the visit last week by Appy and members of the reform working group to the entity.

The secretary also disagrees with the assertions that cashback would be impracticable from a technological point of view and said that the country can implement the mechanism without difficulties.