In a campaign tone, Guedes promises to zero IPI in Bolsonaro’s second term

The Minister of Economy, Paulo Guedes, said this Tuesday (28) that, if Jair Bolsonaro (PL) is re-elected, he will end taxes on production, mainly the IPI (Imposto sobre Produtos Industrializados).

Guedes also promised to change the weight of costs on companies. He said he will make sure that 100% of the investments made for the acquisition of machinery and equipment are depreciated immediately before the incidence of the Income Tax – today this depreciation is discounted over the years.

Bolsonaro has already said that if he returns to office for a second term, he will leave Guedes in charge of the portfolio again.

“We are committed to ending taxes that destroy the country’s productive capacity,” said Guedes. “Our idea is to end the IPI. It deindustrialized Brazil. We dropped from 35%. If we continue, we will drop to zero.”

The statements were made this Tuesday (28) during the opening of the Telebrasil Panel event, promoted by Conéxis, the association of telecommunications companies.

Although he was unable to pass a tax reform in this term, the minister also promised to end all indirect taxes that, according to him, “reach the most fragile population and harm the country”.

He adopted a political tone when addressing the audience: “Don’t be influenced by the fishermen of murky waters, those who take advantage of crises to make politics regardless of what the ambitions of the Brazilian people are.”

The promises to businessmen come at the same time that former president Luiz Inácio Lula da Silva, who leads polls of voting intentions, has intensified his contacts with company presidents and other representatives of civil society.

The minister, who spoke for almost an hour, said that he was unable to carry out the tax reform – which would reduce the impact of taxes on the production chain and employment – because former mayor Rodrigo Maia demanded “almost half a trillion reais ” to the states as compensation for possible revenue losses.

“We had just given BRL 269 billion from Fundeb [Fundo de Manutenção e Desenvolvimento da Educação Básica] for municipalities, R$ 70 billion from Kandir Law [previa ressarcimento em exportações]R$ 20 billion of onerous assignment [reservas de petróleo antes exclusivas da Petrobras] and R$ 150 billion against Covid”, he said. “We gave half a trillion and am I still going to give another half a trillion? Only if I was irresponsible. I said, ‘The account ends here’.”

The reform did not advance in Congress, where the states, in fact, try to stop revenue losses.

Contrary to financial market forecasts, which point to a drop in GDP in 2023 and even recession, Guedes said that the economy should grow 1.7% next year.

The head of the ministry said that, unlike the other countries, which are expected to enter recession, Brazil has recovered in a “V” shape and should now act as a magnet for private investment.

According to Guedes, the US Treasury secretary said that the US and Europe will only be successful in resuming if they have closer input suppliers.

Instead of looking for them in China, they will have to choose “friendly nations”, and Brazil will be the only one in a strategic position.

China and Russia, according to the minister’s analysis, would not be friendly.

The minister said that he is convinced that Brazil is on the right path that seeks the path of income distribution through the entry of private capital and freedom for companies, unlike Argentina, which follows a “path of impoverishment”, and from Venezuela.