Government can increase revenue by updating the value of properties in the IR, repatriation and regularization of funds, says Haddad

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The objective of the measures under analysis is to balance the public budget. The economic team estimates that it will be necessary to increase revenue from R$110 billion to R$150 billion to reach the fiscal framework targets. The Minister of Finance, Fernando Haddad Wilton Junior/Estadão Content The Minister of Finance, Fernando Haddad, said this Tuesday (18) that the government is looking for ways to obtain extraordinary revenues in the coming years to balance the public budget. He cited some measures that are being discussed in the Legislature. They are: updating the value of real estate in the Income Tax a new stage of repatriation of resources from abroad changes in the taxation of exclusive funds, of large investors “If we decide for one of these alternatives, or another one that arises, this will enter the law with the objective of having a balanced budget”, declared the minister. According to Haddad, there is no problem using extraordinary revenues to reach the primary result targets, set in the fiscal framework, by 2026. “Respect the spending rule [contida no arcabouço fiscal] it’s one thing, reaching the primary [metas fiscais até 2026] and other. To reach the primary, there are several measures that I will put in the budget law that provide for extraordinary revenues”, he declared. Earlier this month, the minister stated that it would be necessary to increase government revenue by an amount between R$ 110 billion and R$ 150 billion to make the targets contained in the fiscal framework proposal viable. presented by the economic team. Update of the value of the property in the IR The discussion about the update of the value of the properties in the Income Tax, happened in 2021, in the government of President Jair Bolsonaro. The project, however, did not go ahead. Currently, the registration of properties in the income tax return is done at their original value and is registered at that value over the years.When the sale is made, the rate of 15% to 22.5% is levied on capital gains. The former Ministry of Economy, led by former Minister Paulo Guedes, proposed in 2021 to reduce the Income Tax (IR) rate on capital gains from the sale of real estate to 5% if the taxpayer updated the value of the property. Repatriation from abroad The first round of repatriation of funds from abroad took place in 2016, during the government of President Dilma Rousseff. With this measure, R$ 50.9 billion were collected to help meet the fiscal target. According to the rules, the regularized amount is subject to a 15% Income Tax rate and another 15% fine. At the time, 25,011 individual taxpayers and 103 companies joined the program. Most of the assets (R$ 163.87 billion) were declared by individuals. Companies, in turn, declared R$ 6.06 billion in assets abroad. The amount collected was shared with states and municipalities. The states were left with 21.5% of the tax collection and the municipalities with 24.5%. A new round of repatriation has the potential to generate extra tax revenue. Closed-end funds The taxation of exclusive funds – one of the measures analyzed to increase revenue – was already being considered by the government. But, according to the blog of journalist Julia Dualibi, a g1 columnist, it should stay for the second half of this year – within the scope of the Income Tax reform. Exclusive funds are those formed by large investors. The idea would be to tax them on a regular basis and not just on redemption. The proposal began to be discussed during the Temer government, it even went to Congress, but did not advance. The government estimates that around R$ 10 billion would be raised with taxation. Measures already announced President Luiz Inácio Lula da Silva’s economic team has been committed, since the beginning of the year, to increase revenue. The objective is to improve forecasts for public accounts to enable a reduction in the economy’s basic interest rate. This strategy is part of the so-called “harmonization” between the government’s fiscal policy (collection and public spending) and the monetary policy conducted by the Central Bank (interest rates and combating inflation). See what has already been announced: Extraordinary debt installment program, called “Zero Litigation”, along the lines of the old programs known as Refis. The estimate is to collect between R$ 35 billion and R$ 50 billion this year. Return of the tie-breaking vote in favor of the Tax Authorities in the judgments of the Tax Appeals Administration Council (Carf) – collegiate body responsible for the judgment of appeals from companies fined by the Federal Revenue Service. The expectation is to collect up to R$ 50 billion in 2023. Withdrawal of ICMS from the calculation base for Pis/Cofins tax credits, that is, the tax credit to which the taxpayer is entitled will decrease. The measure could increase revenue by R$ 30 billion. Partial return of federal taxes on gasoline and ethanol. The reencumbrance, implemented through a provisional measure, is valid from March onwards. For gasoline, the increase was R$ 0.47 per liter and, in the case of alcohol, R$ 0.02 per liter. Diesel remains exempt until the end of this year. The projection is to collect about R$ 22 billion in 2023. Creation of a tax on the export of crude oil, between March and June of this year, with a rate of 9.2% – a measure considered extreme by the Minister of Mines and Energy. The expectation is for a collection of R$ 6.7 billion in these four months. Taxation of the electronic betting market on sports games to offset losses with the changes announced in the Income Tax table – exemption for income of up to R$ 2,640 as of May. The measure has not yet been sent to the National Congress. It is expected to collect up to R$ 15 billion in 2023. Provisional measure to correct a “tax distortion” and collect up to R$ 90 billion per year. These are tax incentives given by states to companies for funding expenses. The objective is that the benefits are granted only for investment operations – and that the incentive does not affect the calculation basis of federal taxes. Measures to combat smuggling to increase revenue. The forecast of the Minister of Economy, Fernando Haddad, is to collect between R$ 7 billion and R$ 8 billion this year. This Tuesday, the minister stated that President Lula determined that this be done only through increased inspection – without legal changes.

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