Correction of the IR table would exempt almost 13.8 million taxpayers, according to a survey

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Data from Unafisco shows a gap of 133.65% in the exemption range. The government has been working with the expectation of discussing broader Income Tax reform in 2024. A survey by the National Association of Tax Auditors of the Federal Revenue of Brazil (Unafisco) shows that if the Income Tax table were corrected considering the accumulated inflation until December By 2023, almost 13.8 million people would be exempt. The Association points out a gap in the Personal Income Tax (IRPF) table in Brazil (read more below). According to the entity’s data, the difference between the projected collection (R$321 billion) and the amount that should be collected (R$116 billion) represents R$204.43 billion that families would no longer collect. Tax Reform: Congress has 180 days to detail how it works in practice According to Mauro Silva, president of the entity, the delay raises concerns about Tax Justice. “Despite expectations, the delay in correcting the IRPF persists, without President Lula’s promise of a resolution having been fulfilled,” Unafisco said in a note. The last correction to the Income Tax table was made in 2015, at the beginning of the second term of former president Dilma Rousseff (PT). Since then, there has been no change. Currently, winnings of up to R$2,112 are exempt. If the table were corrected, the exemption range would rise to R$4,934.69, a gap of 133.65%. IR reform The government has been working with the expectation of discussing a broader reform of Income Tax in 2024. The forecast is already included in the Proposed Amendment to the Constitution (PEC) for the tax reform, which established a deadline of 90 days, counting from the promulgation of the text, for Planalto to send a project with changes to income taxation. The reform was enacted on the 20th and established the unification of five taxes into two Value Added Taxes (VATs). The changes will affect taxes on consumption, without changing the IR taxation rules. According to the deadline established in the amendment, the government will have until March 2024 to send a project to Congress. The IR reform is one of the priority proposals of President Luiz Inácio Lula da Silva (PT), who has declared, since the campaign, that he would update the tax exemption table. In 2022, during the campaign, Lula committed to increasing the exemption from Personal Income Tax (IRPF) for those earning up to R$5,000 per month. The economic team, led by the Minister of Finance, Fernando Haddad, is working to fulfill the promise until 2026. In May this year, the government issued a provisional measure that increased the IR exemption to R$2,640. The measure was made possible by updating the exemption range to R$2,112, in addition to a monthly discount of R$528 at source. The last correction to the table had been made in 2015. The presidents of the Chamber, deputy Arthur Lira (PP-AL), and of the Senate, senator Rodrigo Pacheco (PSD-MG), deal with the regulatory phase of the tax reform, which should be discussed a review of Income Tax, as one of the Legislature’s priorities in 2024. The projects are expected to be discussed in the first half of the year. “Next year, in the Legislature, is shorter, because of the municipal elections. Therefore, our priority will be to regulate tax reform, the greatest achievement of the National Congress in recent decades. An advance that will make the country change its level”, said Lira to Valdo Cruz’s blog on g1.

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