Government is not against the super-rich, it just wants equal taxation for everyone, says Appy – 09/12/2023 – Market

The Ministry of Finance’s proposals that change Income Tax on financial investments abroad and exclusive funds aim to ensure that all investors are taxed in the same way, according to the Secretary of Tax Reform, Bernard Appy.

With both measures, the Luiz Inácio Lula da Silova (PT) government does not seek to punish the richest, but to remove advantages that allow people with higher incomes to postpone paying taxes, something that the middle class cannot do, said the secretary .

“There’s nothing against the super-rich. It’s just taxing them equally,” Appy said this Tuesday (12) during an event organized by Oxfam Brasil and the Institute of Socioeconomic Studies. “What I want is an equal rule for everyone.”

According to him, the measures have no ideological connotation — similar proposals were presented by the Michel Temer (MDB) and Jair Bolsonaro (PL) governments.

Appy explained that the current rules allow people who apply abroad through offshore companies or have exclusive funds to postpone the payment of IR indefinitely.

Taxation in these cases only happens when the money returns to Brazil or when the resource is withdrawn from the fund with special treatment. This allows, for example, the money to be passed on through several generations without taxation occurring.

Adopting the same rule for all investors, according to Appy, will have redistributive effects. Still, he said he expected resistance to these proposals, since there are many people benefiting from these distortions.

During the event, Appy also highlighted the redistributive impacts of the Tax Reform that deals with taxes and contributions on consumption, approved in the Chamber in July and currently under discussion in the Senate.

The secretary said that the ministry estimates an increase in additional economic growth equivalent to 12% of GDP (Gross Domestic Product) in 15 years because of the reform, equivalent to R$1.2 trillion.

Of this total, R$400 billion are extra revenues generated for the Union, states and municipalities to apply to public policies.

As the increase in revenue is due to economic growth, there is no increase in the tax burden.

The secretary also stated that the exceptions created by the reform reduced the space for cashback, the tax refund mechanism provided for in the proposal, but do not make its application unfeasible.

The refund is the main mechanism to relieve lower-income people and make consumption taxation less unfair.