Ipea says that the country’s GDP can grow up to 2.39% with tax reform

A study by the Institute for Applied Economic Research (Ipea) released this Thursday (6) points out that the country’s GDP (Gross Domestic Product) could grow by up to 2.39% by 2032 with the tax reform, which should be voted on in the Chamber of Deputies at night.

The research signed by the researcher João Maria de Oliveira shows that, during the transition period, when the old system is gradually replaced by the new one, the simulations “in all scenarios” show GDP growth compared to the scenario without any reform (see in full). He used the measures under discussion in the text that is being discussed in the Chamber, and that should have further modifications in plenary.

“The work presents a survey with 68 sectors of economic activity, for the 27 units of the federation (FU), and compares it with 10 countries/regions with which Brazil has commercial relations. The simulations reveal that changes in the tax structure generate economic growth, as the reform proposals promote structural change in favor of sectors with a longer production chain, with a greater multiplier effect and, consequently, with greater productivity”, he says.

According to Ipea, the text of PEC 45/2019, which was the proposal for a lower rate, would generate greater economic growth, but with considerable regional/sectoral gains and losses. On the other hand, the simulations of the impacts of the substitute, which has the highest rate, would have impacts with sustainable economic growth.

The proposal presented last Monday (3) tends to minimize losses and points in the direction of a possible reform. In addition, after the implementation of the reform, there are conditions for economic growth that can take the Brazilian economy to a higher level.

The researcher also points out that the reform can help create jobs with more qualifications and income. “Although the gains are small, there is an increase in more qualified and higher income jobs”, says Oliveira.

“But, with the change in taxes, there are real gains in labor productivity, which is yet another evidence that the tax reform will bring gains in productive allocation, as it stimulates an increase in job offers”, completes the researcher.