Flaviopédia Português
Brazil that Does Not Go Back

Lower taxes: the tax reform corrected

Proposes revising and resizing the ongoing tax reform, reducing the IVA, ensuring non-cumulative taxation, removing the tax burden on exports and investment and reducing exceptions.

In the program: [p. 71, 72] · Translated by Flaviopédia from the official Portuguese text; the Portuguese quote is authoritative. Read the original in Portuguese

What the program says

The tax reform passed by the current administration was delivered at the mercy of the lobbies. Since the entire transition was left to the following terms of office, those who passed it paid no political price, and the population was left with the bill: about R$ 1 trillion with no defined budget source in the two funds created by the reform, plus more than R$ 500 billion in exceptions resulting from the lobbies, which became permanent. We will carry out a review and resizing of the ongoing tax reform and of the tax increase carried out by the current government, with the aim of effectively reducing the burden on production and consumption. We will correct its distortions, reduce the IVA (value-added tax), today projected at one of the highest levels in the world, and ensure non-cumulativeness, so that tax is not charged on tax. In this way the reform becomes more balanced, preserving simplification and adherence to the best international practices. The simplification effort will continue: fewer taxes, unified legislation, removal of the tax burden on exports and investment, and fewer exceptions, so that similar groups pay similar taxes. The virtuous circle is clear: lower taxes, more formalization, more growth. [p. 71, 72]

In plain language

  • The program proposes revising and resizing the ongoing tax reform and the tax increase carried out by the current government, with the aim of reducing the burden on production and consumption.
  • It provides for reducing the IVA and ensuring non-cumulativeness, so that tax is not charged on tax.
  • It provides for continuing the simplification, with unified legislation, removal of the tax burden on exports and investment, and a reduction in exceptions, so that similar groups pay similar taxes.
  • The text states that the approved reform left about R$ 1 trillion with no defined budget source in the two funds it created, plus more than R$ 500 billion in exceptions that became permanent.

What is not in the program

  • It does not say by how much the IVA would be reduced or what the new rate would be.
  • It does not indicate which tax increases would be reviewed or which exceptions would be eliminated.
  • It does not identify the two funds cited or say how the amount with no defined budget source would be handled.
  • It gives no estimate of the effect of the reductions on revenue.
  • It does not name the legal instrument (law, constitutional amendment or other) or a timeline for the changes.