government announces tax cut to lower prices

The government announced this Thursday (25) a program of tax benefits for automakers. The intention is to lower the cost of so-called popular cars and stimulate the productive chain of the automotive sector. According to the vice-president and minister of Development, Industry and Commerce, Geraldo Alckmin (PSB), the program will allow vehicle prices to fall from 1.5% to 10.79%.

Companies will benefit from exemption from IPI, PIS and Cofins on vehicles worth up to R$ 120,000. “The stimulus proposal is transitory and countercyclical, for this moment when the industry is very idle”, he said.

The benefit will be instituted through a provisional measure (MP), based on a study by the Ministry of Finance, which undertook to present a proposal for percentages within 15 days. “The maximum discount would be 10.79%, and the minimum 1.5%,” said Alckmin.

The granting of new tax exemptions contradicts the discourse of the Minister of Finance, Fernando Haddad, who since the beginning of the government has defended a reduction in this type of benefit.

To access the tax discount, three criteria will be taken into account. The first is related to the car category. “Today the cheapest car costs almost R$ 70,000. We want to reduce this amount. The smaller, more accessible, the greater the IPI, PIS and Cofins discount. So, the first item is social”, stated the vice-president .

Another requirement is related to energy efficiency. Cars with lower CO2 emissions will have greater benefits. The last criterion is local content. “The whole world seeks to strengthen its industry. So if I have an industry in which 50% of the car is made in Brazil, and another in which 90% is made, that will be taken into account”, he explained.

Alckmin also said that this afternoon, the president of the National Bank for Economic and Social Development (BNDES), Aloízio Mercadante, will announce two lines of credit totaling R$ 4 billion for financing, in dollars, for exports.

The announcement was made after a meeting, at the Planalto Palace, with representatives of entities from the automotive sector and trade union centrals, in which president Luiz Inácio Lula da Silva (PT) and the ministers of the Civil House, Rui Costa, and of Farm, Fernando Haddad.

Since the beginning of the current administration, the automobile industry has maintained dialogue with the government, in the search for measures that will help to recover the sector, which has been stagnant since the beginning of the pandemic, in 2020. At the moment, several automakers have temporarily suspended production or have cut factory shifts due to component supply problems and low demand.

Earlier this month, during the first meeting of the Sustainable Economic and Social Development Council, Lula criticized car prices in Brazil. “Which poor person can buy a popular car for R$90,000? A R$90,000 car is not popular. It’s for the middle class,” she said.