Tax reform: even with ‘lock’, Brazil will remain among countries with the highest burden of taxes on consumption

[ad_1]

The rapporteur suggested a ceiling for the tax burden on consumption, which would be around 12.5% ​​of GDP. The value would exceed the average for the OECD, the United Kingdom (10.1%), Canada (8.8%) and Chile (10.6%). Tax reform covers taxes on consumption Reproduction: Freepik The proposal from the rapporteur of the tax reform in the Senate, Eduardo Braga (MDB-AM), brings a “lock” to the collection of taxes on consumption, that is, a limit that does not may be exceeded. According to the text presented by the senator, the limit for the tax burden will be the average from 2012 to 2021, in proportion to the Gross Domestic Product (GDP), represented by revenues from PIS/PASEP, COFINS, IPI, ISS and ICMS. Join the g1 channel on WhatsApp The Extraordinary Secretariat for Tax Reform of the Ministry of Finance reported that the average of these ten years (2012 to 2021) of the burden related to these taxes is 12.5% ​​of GDP. This level exceeds that of the Organization for Economic Cooperation and Development (OECD), which brings together more developed countries and other nations. Senator Eduardo Braga has said that this block is important to give peace of mind to taxpayers and the Brazilian productive sector, and to guarantee the “neutrality” of the Brazilian tax burden. And he adds that setting a ceiling for the tax burden “will help citizens mobilize against an increase in the burden of these taxes, demanding, from governments, a commitment to austerity and spending control.” READ ALSO Tax reform: see the main points of the text that will be evaluated by the Senate Tax reform: Senate rapporteur proposes more resources for states and review of benefits for sectors every 5 years Finance study predicts rates between 25.45% and 27 % with the Tax Reform International comparison For an international comparison, the Federal Revenue used data from 2020, when revenue from consumption in the country represented 13.5% of GDP. Last year, according to the Ministry of Finance, the five taxes involved in the tax reform (PIS, Cofins, IPI, ICMS and ISS) raised the equivalent of 13% of GDP. Even at 12.5% ​​of GDP, within the limit established by rapporteur Eduardo Braga’s proposal, the Brazilian tax burden on consumption (involving PIS, Cofins, IPI, ICMS and ISS) would be above the OECD average, made up of more developed countries (10.8% of GDP). And also from countries such as the United Kingdom (10.1% of GDP), Canada (8.8% of GDP) and Chile (10.6% of GDP) – see below. Tax burden on consumption Federal Revenue Study If Brazil taxed consumption at the OECD average level, that is, at 10.8% of GDP, around R$200 billion less in taxes would have been charged on products and services in the year 2020 in the country. Poor people pay the bill The consequence of the greater concentration of the Brazilian tax burden on consumption in Brazil is the high degree of “regressiveness” (proportionally more is collected from those who earn less). The logic is that, if the tax is the same for everyone, it consumes a greater portion of the income of those who earn less. “Numerous studies demonstrate that Brazilian taxation is deeply regressive, as it burdens the poorest much more than the richest, in proportion to each person’s income, in other words, it is a factor that deepens social inequality”, assessed the Fiscal Justice Institute , a non-profit civil association. Senator Eduardo Braga, rapporteur for tax reform in the Senate, also draws attention to this point. “We are firmly convinced that the taxpayer, as a consumer, cannot continue to support the burden of the State. Taxes on consumption are regressive and weigh more heavily on the backs of the poorest”, says the report by senator Eduardo Braga. Income taxes While consumption taxes are considered high in Brazil, as in the case of payroll, other tax bases, such as income and assets, have values ​​below the world average. At 6.9% of GDP in 2020, the tax burden on income in Brazil was well below the OECD average (10.6% of GDP) and more developed countries, such as Canada (16.7% of GDP) and France (11.9% of GDP). Income Taxation in Brazil Federal Revenue Study The federal government has said that it intends to make changes to Income Tax only after the approval of the tax reform on consumption in the National Congress. In January of this year, during the World Economic Forum, held in Davos (Switzerland), Oxfam, an independent non-profit organization, recommended increasing taxes on millionaires. Increasing income taxation is one of analysts’ recommendations to tax the richest and reduce social inequalities. Possible paths include: Resuming the collection of Income Tax on the distribution of profits and dividends from companies to individuals. Company profits are already taxed in Brazil, but their distribution to individuals, since 1996, has been tax-free – something that does not happen in most countries. This is considered a jabuticaba of the Brazilian economy, as the vast majority of nations tax the distribution of profits and dividends. Establish a range, and a higher rate, for IRPF collection. Currently, the highest rate in Brazil is 27.5%, while it exceeds this level in developed countries. In the USA, rates vary from 10% to 37%. In Portugal, the table varies from 14.5% to 48%, and in Argentina, from 5% to 35%. Reduce health and education deductions in Personal Income Tax. Educational deductions favor the richest and the suggestion is to review the benefit. Already 88% of the IR benefit for health, assessed the former Ministry of Economy, in 2022, is concentrated in the portion (20%) corresponding to families with higher incomes, and 16.4% (1%) with higher income. The Minister of Finance, Fernando Haddad, has also proposed, and approved in the Chamber of Deputies, a bill that provides for the taxation of “offshores” (investments abroad) and exclusive funds (personalized investment funds for high-income people) . To be valid, the text still needs to pass the Federal Senate. Taxes on wealth According to data from the Federal Revenue on the tax burden for 2021, only 4.87% of all taxes collected in Brazil that year were on wealth. In 2020, taxes on wealth represented 1.6% of the Gross Domestic Product (GDP), below the OECD average, formed by more developed nations, of 1.8%. They were also below countries such as Canada (4.2% of GDP), France (4% of GDP), the United Kingdom (3.9% of GDP) and the United States (3% of GDP). In a seminar promoted by the Institute of Applied Economic Research (Ipea) last week, Alberto Barreix, a consultant at the Inter-American Development Bank (IDB), assessed that the increase in debt and inequalities in Latin America could lead countries in the region to review their models of taxation on wealth, which, according to him, record low revenue. Inheritance tax in Brazil has different rates depending on the state, ranging from 1% to up to 8% – the maximum percentage allowed by national legislation. Data from 2017 shows that values ​​are higher in other countries, with a limit of 40% in the USA, 50% in Germany and 60% in France. Among the taxes on assets in Brazil, or properties, are the IPVA (state) on automobiles; the IPTU (municipal) on the value of properties; the ITCMD (state), also known as inheritance tax; the ITBI (municipal) on the transfer of properties; the ITR (state), on rural properties. “Heritage taxes are important and need to be considered. In Latin America, property taxes are very poorly charged, especially property taxes. There we have a deficit that we need to correct. But we need to think about intelligent designs”, said Alberto Barreix, consultant at the Inter-American Development Bank (IDB), in the middle of this year. The tax reform approved by the Chamber brings the taxation of aircraft and luxury vessels with the Motor Vehicle Tax (IPVA). In the current system, jets and speedboats do not pay the tax. The text also includes the collection of ITCMD (Cause of Mortis and Donation Transmission Tax) progressively depending on the value of the inheritance or donation. The charge will be made at the deceased person’s home. Technical note from Unafisco Nacional, released in March this year, recommends introducing the so-called tax on large fortunes to tax the rich more. “Historically, wealth taxation has already been adopted in several countries, being maintained in some (such as Uruguay, Switzerland, Norway and France) and extinguished and then resumed in others (such as Spain, which reintroduced the tax in 2011)” , says the document.

[ad_2]

Source link