Raising income tax exemption range to R$ 5,000 is proposed for term, says Wellington Dias

Elected senator Wellington Dias (PT-PI) said this Monday (14) that the promise of the elected president, Luiz Inácio Lula da Silva (PT), to raise the income tax exemption range for individuals to R$ 5,000 is a “for the term” goal — which will run until 2026.

The speech of Dias, who is currently the coordinator of the legend in the 2023 Budget negotiations, reinforces the signal that the new government should not discuss the implementation of this measure in the short term. When citing the horizon of the mandate, he also leaves the door open for a gradual expansion of the IR exemption range.

“It is a proposal for the mandate. It is not being addressed even in the PEC [da Transição] nor in the reorganization of the Budget”, said the senator-elect in an interview with the program Roda Viva, on TV Cultura.

The PEC (proposed amendment to the Constitution) of the Transition is being negotiated by the PT to remove expenses with Auxílio Brasil from the spending ceiling, a fiscal rule that limits the advance of expenses to inflation.

The proposal would leave BRL 175 billion from the social program (which will once again be called Bolsa Família) outside the spending limit and would free up the BRL 105 billion currently reserved for the policy to be redistributed to other actions that lack funds.

The PEC does not, however, deal with tax measures, which should be left for later. as showed the Sheet, PT members defend the discussion of the correction of the IR table only in the next year. Among party economists, there is an assessment that the measure should be treated as part of a broader reform.

The promise of expanding the exemption range to R$5,000 a month was brought by Lula to the electoral program during the campaign. Today, this value is up to R$ 1,903.98. Without correction of the table, workers who earn 1.5 minimum wage will pay Income Tax from next year.

The issue is delicate because any change in income tax ranges means giving up revenue at a time when the government still has the prospect of living with deficits in public accounts.

The impact tends to be significant, as the readjustment of the exemption band would have the effect of pushing the other bands. The exemption promised by Lula exceeds even the current maximum range, focused on those earning above R$4,664.68.

Wellington Dias also reaffirmed the PT’s intention to propose, in the Transition PEC, the withdrawal of Bolsa Família from the spending limit, resulting in the extract of R$ 175 billion.

This Monday (14), the Bloomberg news agency reported that Lula’s team could evaluate a more conservative alternative, with an authorization of R$130 billion outside the ceiling valid only in 2023.

“Everyone who participated [da transição] We have a commander there, the commander who was chosen by the people, who is President Lula. And it was with him that the hammer was struck, of the options that [se] had, which one we should follow”, said the senator-elect, citing the proposal to remove Bolsa Família from the spending ceiling.

Dias stressed, however, that the group of transition economists —coordinated by Persio Arida, André Lara Resende, Nelson Barbosa and Guilherme Mello— will be heard in the negotiations.

On Monday night, the group released a note informing that it asked the transition coordination to access the current text of the Transition PEC and “the data that supported it”. “There was no definition of text or alternative values ​​to the PEC currently in the process of elaboration in the National Congress”, says the note.

“Once available, the requested information will be analyzed and discussed by the transition team in further meetings.”

The first meeting of the group of economists was held in virtual format last Friday (11). “On the occasion, topics related to work methodology, access to information and the technical support necessary for the good development of the group’s work were discussed.”