Revenue reaffirms political challenges to cutting exemptions, but criticizes Folha – 04/28/2023 – Market

In a clarifying note released this Friday (28), the Federal Revenue reaffirms the political challenges of cutting exemptions, but criticizes the headline of the Sheet “Cutting exemption as provided for fiscal milestones is unfeasible, says Revenue”.

Sought by the report on Wednesday (26) to comment on the content of the survey carried out in 2019 and explain what would be the alternatives to guarantee an increase in revenue by cutting tax exemptions —given the difficulties presented in the document—, the Federal Revenue office said that neither the Ministry of Finance nor the agency would comment.

“It is mistaken and uninformative because the study was produced in 2019, much before, obviously, the formulation of the proposed fiscal framework”, says the note on the headline of the Sheet. “Furthermore, the framework does not even provide for an exemption cut, however relevant it may be, as a specific premise or condition.”

The text highlights, however, that the survey that serves as the basis for the article entitled “Revenue Note warns about political risks in cutting tax spending” is “quite solid”.

According to the clarifying note, “this study, quite solid, it should be said, points out political challenges, much more than technical ones, for cutting tax benefits, which does not mean, evidently, unfeasibility.”

The report of Sheet points out that the study by Revenue technicians completed in 2019 points out that it is unfeasible to revert tax waivers in a linear manner and without a transition period. It also advises against specific and isolated changes, which would attract opposition from economic sectors and Congress, putting at risk a more efficient and global review of exemptions within the way that matters, in the tax reform.

Economists consulted assessed that the conclusions are current because there was no change in the tax system, and considered that the current political environment is even worse than that experienced in 2019.

The Revenue states in the note that the federal government has recently demonstrated that it is possible to clean up the Brazilian tax and fiscal system with the extinction of the so-called “jabutis”, this, yes, commitment of the current management, highlights the agency.

“This is the case of the eloquent judgment of the Superior Court of Justice prohibiting the reduction of the base of Income Tax and Social Contribution on Net Income due to ICMS benefits, with coordinated and safe action by the government in the work of convincing the judges” , says the note.

“Furthermore, on the first day of this administration, there were revocations of tax benefits, which have been confirmed by the National Congress, demonstrating that political challenges do not prevent the progress of this sanitation.”

Reinforcing the question, he says that the headline of the Sheet is “sensationalist”.

“The headline is sensationalist and uninformative, as it implies that the Revenue made a current statement, against the framework. Only in fine print does it inform that it is a 2019 study. in the past) the means to enable the reduction of tax expenditure in a consistent manner.”

“So that there are no doubts: the Federal Revenue reiterates its commitment to the effectiveness of taxation, through operational and structuring actions that have been announced, which will enable the achievement of the goals set in the proposed fiscal framework.”