Income Tax: almost 29 million people would be exempt if the table were corrected for inflation

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The gap reaches 148.1%, according to calculations by the Federal Revenue auditors. With full correction, those who receive up to R$ 4,723.78 per month in 2023 would be exempt in 2024. Income in 2024 if the table were fully corrected for inflation. The calculations are from the National Association of Tax Auditors of the Federal Revenue Service of Brazil (Unafisco). The number is more than double (20 million more exempt) than the 8.8 million currently listed. In the current Income Tax table – which has not been corrected since 2015 – those who receive up to R$ 1,903.98, equivalent to almost one and a half minimum wages, are exempt. Calculations carried out by Unafisco show that the accumulated gap reaches 148.1% (the rate is the difference between the current R$ 1,900 and the R$ 4,700 in case of correction). The percentage considers the adjustments made and the accumulated inflation from 1996 – the year in which the IRPF table ceased to undergo annual readjustments – until December 2022. In the government of former President Jair Bolsonaro (PL) alone, the accumulated lag was 31 .49%, according to Revenue auditors. The correction had been, however, one of Bolsonaro’s campaign promises in 2018, which was repeated in the 2022 election race. The theme was also explored by Lula (PT) in the race for the Presidency. Already elected president, Lula once again defended exemption from income tax for those earning up to R$5,000, in an interview with GloboNews presenter and g1 columnist Natuza Nery. The proposal, however, is still far from being implemented. The government’s most advanced project on the subject deals with raising the IR exemption floor, as of May, for those earning up to R$ 2,112. The amendment will be proposed through a Provisional Measure, which needs the approval of the National Congress to become law. The lag in practice The lag in the table leads people with ever lower purchasing power to the contribution base – that is, there are more and more people obliged to pay taxes, since wages tend to rise to correct inflation (or part of it). her), while the IR table remains the same. As a consequence of the lack of correction in the table, taxpayers also pay an increasingly higher rate in relation to previous years, since salary adjustments (albeit, in many cases, below inflation) can make the person enter another bracket of income. income from the IR table. IR table accumulates a lag of 148.1%. Art/g1 Delayed deductions The auditors also draw attention to the outdated limits of permitted deductions and the installments to be deducted from each income bracket. In this year’s statement, corresponding to 2022 income, the discount ceiling per dependent is R$ 2,275.08 per year. With correction, it could reach BRL 5,644.47 in the 2024 declaration, corresponding to the income of 2023. The deduction for expenses related to education is limited to BRL 3,561.50 per year according to the current table. To replace the entire inflation gap, the corrected amount should be R$ 8,836.08. Result for the public coffers The federal income tax collection for the calendar year 2023 is estimated by the auditors at R$ 395.64 billion. Any correction to the table would represent a loss of revenue for the government. Unafisco estimates that a complete correction of the table would reduce the amount that enters the public coffers to less than half, with a collection of R$ 166.8 billion. Therefore, the full correction of the IRPF table would cause a revenue loss of around R$ 228.84 billion.

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