Haddad says government wants to vote on change in income tax in the second half

Minister Fernando Haddad (Finance) said this Tuesday (17) in a panel on Brazil at the World Economic Forum that the government intends to vote on a reform of the IR (Income Tax) in the second half, slicing, in practice, the tax reform. Haddad also said that he intends to present the government’s fiscal rules by April.

“There is a tax reform that we want to vote on in the first semester, it is the consumption tax. But, in the second semester, we want to vote on the income reform to relieve the poorest layers and to burden those who do not pay taxes”, he declared in Davos, Switzerland.

According to Haddad, this would mean “rebalancing the Brazilian tax system to improve income distribution”.

Asked later by journalists about what he envisaged in terms of change in income tax, the minister mentioned the collection of tax on profits and dividends.

“There is an assessment, for example, of charging Income Tax on profits and dividends,” he said after attending a dinner with investors offered by BTG at a hotel in Davos.

But, with a view to approval from April of the tax reform on consumption, he said he preferred not to give further details regarding the change in income taxation —nor to speak of a possible increase in the burden— because that second stage had not yet been completed. defined, and the first, yes.

“It is not a debate that will be held now, for the tax reform that is in Congress. We are going to leave that for the second half, because this one is ripe for voting, and the other one has not even been forwarded.”

As an example of what he later called injustices to be corrected in a second stage, he stated that “there are people who think the direct tax in the way it is charged is very unfair, because yachts, jets do not pay IPVA and cars that are sometimes ten years old pay, why Income Tax is levied on workers, but not on entrepreneurs who have distributed profits and dividends.”

Questioned about an increase in the minimum wage, promised by President Lula in the campaign and discussed by the team at the time, the minister stated that, to define the value, it is necessary to wait for the Ministry of Social Security to present the size of the retirement queue.

Emphasizing that the Budget cannot be changed, Haddad stated that it is necessary to know how much money goes to retirement in order to know how much would go towards a possible readjustment of the salary floor.

The minister, who has maintained an extensive agenda in Davos, took part in a panel mediated by the director of Latin America at the forum, Marisol Argueta, alongside his colleague Marina Silva (Environment) to talk about Brazil.

The audience in the partially filled 88-seat room was largely made up of Brazilian participants.

On the eve, Haddad told journalists at the event in the Swiss city that the government does not intend to increase taxes. He was referring mainly to the IPI (tax on industrialized products).

With the shadow of a fiscal gap and the need to balance the accounts —something Haddad claims the Lula government is committed to—, a change in the IR to increase rates for higher incomes started to be suggested.

In addition to talking about institutional solidity and environmental protection, the minister has repeated in the forum the idea that the government intends to balance the accounts. The three themes, especially the last one, are the target of the main questions raised by investors at the event to Haddad.