Incentive for cars does not reach R$ 2 billion and will be compensated – 06/01/2023 – Market

Minister Fernando Haddad (Finance) said this Thursday (1st) that the car purchase incentive program has been “redesigned”, will cost less than R$ 2 billion and will be offset by collection measures already approved by President Lula ( PT).

The topic was discussed at a meeting between the two this Thursday afternoon at the Planalto Palace. Technicians are now rushing to close the text of the MP (provisional measure), which the government intends to edit until next Monday (5).

Haddad did not give details of the program’s new design, nor did he say what the compensation measure will be. He only stated that the incentive will last “around 4 months”.

Asked about his previous forecast, of a cost below R$ 2 billion, he replied that this perspective remains.

“Not only does it not [a R$ 2 bi] as it is more than offset by the measures I took to the president”, he said. “Everything is well delimited, and the president validated the source to finance without any disengagement from this year’s fiscal targets.”

The cut in federal taxes to encourage the purchase of cars up to R$ 120,000 was announced on Thursday (25) by Vice President Geraldo Alckmin (PSB), who is also Minister of Development, Industry, Commerce and Services.

The launch of the program, however, was done without the details being finalized. Within the government, a discussion began about the cost of the benefit and how to finance it.

The MDIC even presented estimates for a 7-month program (until the end of the year), with a cost of up to R$ 990 million. The tax reduction would reach IPI (Tax on Industrialized Products), PIS/Cofins, in addition to IOF (Tax on Financial Operations) on financing.

Since last week, however, Haddad has already been signaling that the benefit would have a shorter duration, “of three or four months”.

“We redesigned the program, submitted it to President Lula today, he validated the program, and now it is being processed here at the Ministry of Development and at the Ministry of Finance to reach the Civil House”, said Haddad.

According to him, the two ministries were “well contemplated with the solution”, both in terms of cost and compensation as well as stimulus to the sector.

“It is a matter limited to the coming months, so that there are no layoffs. There is a great concern with employment in the automobile industry, in the entire chain, not just the assemblers”, he said.