Government gives up billions with privileges and exemptions – 05/31/2023 – Market

The government will fail to collect R$ 641.5 billion this year with tax privileges and benefits with social compensation, according to calculations by Unafisco (association of auditors of the Federal Revenue Service).

The account considers tax expenditures of BRL 456 billion disclosed by the Treasury and three more privileges listed by the entity: the lack of a Tax on Large Fortunes (BRL 73.4 billion), exemption in the distribution of profits and dividends (BRL 74 .6 billion) and installment programs (BRL 37.3 billion).

These three items do not enter the official Revenue account, which lists exceptions to the tax system.

The first, because it is a tribute that does not exist. The second, because it is considered part of the general structure of the Income Tax by the Treasury. In addition, the charge on dividends does not increase the general collection, since the proposal being elaborated by the government foresees the reduction of the IRPJ to maintain the total tax burden. Already the installment is considered by the government as postponement of tribute.

Unafisco divides the total amount into R$440.5 billion in tax privileges, those that do not return to society, and R$201 billion in benefits granted by the federal government with a socioeconomic counterpart.

Three tax expenditures had their amounts divided between the two categories: Simples Nacional, exemption from the basic food basket and medication.

The benefit to companies in Simples Nacional with annual income above R$ 1.8 million (about 25% of the total) is considered a tax privilege by Unafisco. The current limit of the program is R$ 4.8 million.

Regarding exemptions for the basic food basket and medicines, the values ​​for families that are outside the government’s social programs (72% of this exemption) are classified by the entity as a privilege.

Unafisco puts on the list of benefits with counterpart deductions with health and education in the Individual Income Tax, exemptions for private educational institutions in Prouni and the MEI (Individual Micro-entrepreneur), for example.

“The creation of the Tributary Privilegiometer aims to demonstrate which are the tax expenditures that are currently listed by the Federal Revenue, how the concept of tax expenditure adopted by the body is distinguished from that brought by the Federal Constitution of 1988 and how some tax expenditures, under the terms in that are found, are configured as mere tax privileges, and, therefore, bring little or no return to society”, says the study.

The study cites a report by the Sheet on a confidential technical note from the Federal Revenue, produced during the Bolsonaro government, which cites difficulties in reducing tax spending.