Payroll exemption in 2022 runs out of budget resources

The rapporteur of the 2022 Budget proposal, Deputy Hugo Leal (PSD-RJ), failed to provide resources to extend the exemption from the payroll of 17 sectors. Amounts are only reserved to pay the remainder of the program’s execution in 2021.

The exemption would end at the end of this year. After pressure from business, however, Congress approved the extension until 2023. The measure has not yet been sanctioned by President Jair Bolsonaro (PL).

Leal claims that the resources needed for the measure to be extended were at least R$ 8.5 billion (already considering the amount allocated to the payment of the 2021 aftermath). But the rapporteur only kept R$ 3.2 billion related to the surplus from the execution of the program this year.

In other words, at least R$5.3 billion is missing. Leal confirms that the value was below that indicated by the government, but says that the Executive Branch will be able to supplement the resources. “It is the Executive that controls the budget for revenue and expenditure,” he told leaf.

“The Executive could forward a PLN [projeto de lei do Congresso] with the inclusion of this expense in the Budget and with the cancellation of others, as it is a procedure that can be done during the 2022 fiscal year”, says Leal.

When contacted, the Ministry of Economy said that the exemption was among the government’s priorities and that the list with those preferences was sent to Congress. The folder did not immediately respond if it is going to reallocate resources for next year.

Throughout the discussions, the Ministry of Economy was against the exemption only for some sectors and defended that there should be a broader movement to reduce taxes from all companies.

But given the high volume of resources needed, the measure would demand budgetary compensation — which could be done via the creation of a new digital tax (similar to the old CPMF). The proposal did not prosper.

Payroll exemption is a mechanism that allows companies in the benefited sectors to pay rates of 1% to 4.5% on gross revenue, instead of 20% on payroll.

This permission was created ten years ago as a way to reduce the costs of hiring labor for some sectors. At least eight years ago, it was expanded to cover more segments, which are covered to this day. Under current legislation (law 12,546 of 2011), it would expire on December 31 of this year.

The sectors reached by the measure are footwear, call center, communication, apparel and clothing, civil construction, construction companies and infrastructure works, leather, manufacturing of vehicles and bodies, machinery and equipment, animal protein, textile, information technology , communication technology, integrated circuit design, subway-railway passenger transport, collective road transport and road freight transport.