Haddad estimates that tax reform will grow GDP at least 10% in 15 years

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In an event with mayors, the Minister of Finance also defended that the new tax on added value should be charged at the ‘destination’, that is, where the product is consumed. The Minister of Finance, Fernando Haddad, said this Tuesday (28) that the tax reform advocated by the government, in the worst case scenario, will have a positive impact of 10% on GDP over a period of 15 years. “The impact on the GDP of this reform, in the worst case scenario, is 10%. It is as if we were 10% richer”, said Haddad during an event promoted by the National Confederation of Municipalities (CMN). The extraordinary secretary for tax reform at the Ministry of Finance, Bernard Appy, had already disclosed that the tax reform, in a conservative scenario, would have an impact of 12% or more on GDP over a period of 15 years. In the optimistic scenario, the impact would be 20%. At the event with the mayors, Minister Haddad also defended that the new value-added tax should be levied at the “destination”, that is: at the place where the products are consumed. Currently, tax is levied where items are produced. This would contribute to fighting the so-called “tax war” – the name given to the dispute between states for companies to establish themselves in their territories. The government advocates that the tax reform on consumption replace federal taxes and local taxes (ISS and ICMS) with a single value-added tax (VAT), a model charged in several countries around the world. The National Front of Mayors (FNP), which represents large and medium-sized municipalities, fears that, with the extinction of the ISS, municipalities will lose autonomy over collection. Haddad stated that there will be no change in revenue for most city halls, and even for that portion that may be affected, there will be a transition period. “70% of this tax will stay in the same place, and what will come out will be with a smooth transition rule”, said the minister. “I want this Brazil that places citizens above our political disputes”, he added.

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