Collection continues to grow despite tax cuts

When releasing the August collection result next week, the Federal Revenue should show a performance that is still on a growth path despite the different tax cuts made this year.

The revenue administered by the agency (which includes items such as income taxes, IPI and social security contributions) should show a real increase (that is, after discounting inflation) of 7.6% in relation to August of last year, according to information obtained by the Sheet.

The growth is higher than that observed in five of the previous seven months, including July (which showed a real increase of 5.2% compared to a year earlier).

The result should represent a record level, of approximately R$ 165 billion in the month. In addition to this amount, the federal collection also adds up what was collected in royalties and other types of earnings (the so-called revenue administered by other bodies).

This year, the result of the total collection (which combines the part of the Revenue with that of other agencies) has been driven by the growth of oil. This is due to the higher barrel price scenario than last year, which was fueled by the Ukraine war.

The performance of the country’s total revenue should reach the range closest to 10% compared to the same month in 2021.

Even with the increase, the trend is for the variation to be below or very close to that registered in the total collection between January and July, whose real increase was approximately 10.5% in relation to the same period last year.

As a result, the August result would be below the average for the first half of the year, precisely at the beginning of the period in which economists are predicting a slowdown in activity as a whole. Despite this, analysts often say that the result of just one month does not necessarily represent a trend.

Under pressure from the political wing of the government, the Ministry of Economy has adopted measures that increase public expenditure and also reduce revenue, such as tax exemptions. The team of Minister Paulo Guedes (Economy) argues that the initiatives can be adopted because there is a structural and permanent improvement in revenues, which is contested by analysts.

Many experts are skeptical of the collection’s lasting vigor, as the boost comes from temporary factors such as inflation and commodity prices (which boost revenue from royalties and special participations).

Given the record level of tax collection in the year, Guedes has said that the numbers are an unequivocal reflection that economic growth is sustainable.

Revenue technicians also say that the performance of collection shows an improvement in macroeconomic indicators, which increases company gains and increases the payment of taxes.

This week, the government presented, for the first time, an official estimate of the primary surplus in the accounts of the central government (which includes Social Security, the National Treasury and the Central Bank).

The projection is for a positive result of R$ 13.5 billion – before, the estimate was a deficit of R$ 59.5 billion. The data indicates that the revenues collected by the government will exceed expenditures for the first time since 2013.

This was achieved after record results on the collection side and also through non-recurring measures throughout 2022, such as receiving extra dividends from the BNDES (National Bank for Economic and Social Development, which has already guaranteed R$18.9 billion in an extraordinary way) and gains from the privatization of Eletrobras (which earned the Treasury R$ 26.8 billion).

On the expenditure side, the result is benefited by the existence of the spending cap rule and by a maneuver carried out in the form of a constitutional amendment in 2021 that allowed to postpone from 2022 to the following years at least R$ 20 billion in precatories (debts of the State recognized by the courts).