Haddad promises to disclose alternatives for tax relief next week

Softening the tone used previously, the Minister of Finance, Fernando Haddad, stated, on Friday (22), that he will present next week a set of measures to compensate for the extension of the payroll tax exemption, which was extended by the Congress until 2027.

On Thursday (14), after the veto of President Luiz Inácio Lula da Silva (PT) on the project was overturned, Haddad had said that he intended to legalize the extension of payroll tax relief for 17 benefited productive sectors, considered by him “unconstitutional” , as it reduces social security revenue. Furthermore, the minister did not argue that the waiver, which could reach R$25 billion, was not foreseen in next year’s Budget.

According to Haddad, Lula guided the search for a political solution to the issue. “Next week, we will address new measures. We are waiting for what was approved by Congress to send them”, he said. “Next week’s measures aim to compensate for the exemption,” he said.

The minister guaranteed that they will be “reasonable” measures and that they have already been the subject of discussion in the Chamber and the Senate. He also ruled out raising taxes and the relationship with Cide (Contribution for Intervention in the Economic Domain). “We are sure that it will be a good thing for the country,” he declared.

Income Tax, the minister guaranteed, will not be affected. “There will be no measure on Income Tax, because this is a reform that will require a lot of explanation, caution and common sense. It is not something that can be resolved thoughtlessly,” he said.

The alternative to tax relief had been postponed. The government leader in Congress, senator Randolfe Rodrigues (no AP party), suggested that the proposal envisages a gradual reduction of the benefit.

Exemption has mobilized productive sectors and Congress

The issue has mobilized businesspeople, trade unions and opposition parliamentarians due to the threat of job losses. The exemption is a benefit that reduces the tax burden on companies, replacing the 20% social security contribution, levied on payroll, with rates of 1% to 4.5% on gross revenue.

Congress reduced, in addition to the benefited sectors, the taxation on urban transport companies. In response to the interests of municipalities, they reduced the social security contribution rate for municipalities with up to 142 thousand inhabitants from 20% to 8%.

This point could have been vetoed separately. But Lula opted, advised by Haddad, for a full veto, which ended up being overturned by Congress.