Bolsonaro confirms that he sanctions this sixth exemption from the 17-sector sheet

President Jair Bolsonaro (PL) announced that this Friday (31) he will sanction the bill that extends the exemption from the payroll of 17 sectors.

Without giving details, the president said that he will have to present “alternative sources” to make the proposal’s sanction viable. Bolsonaro also informed that he will sanction the exemption of IPI (Tax on Industrialized Products) for taxi drivers.

The payroll tax would end at the end of this year, but businessmen pressed, and Congress extended the policy until the end of 2023.

The Ministry of Economy pointed out the need for compensation, as the measure generates a waiver of revenues of around R$ 9 billion a year.

The revenue report in the 2022 Budget was approved without this estimate, hence the need to compensate for the lower revenue. This is a requirement of the LRF (Fiscal Responsibility Law).

For this reason, the government is preparing a menu of measures that include extending the increase in the IOF (Financial Operations Tax) on credit operations and maintaining higher taxation on banks.

In September, Bolsonaro issued a decree that raised the annual rate of the IOF on credit operations for legal entities from 1.5% to 2.04%. For individuals, the rate went from 3% to 4.08%.

The original forecast was that the surcharge would only be in effect until December 31, 2021. Now, it should extend until the end of 2022. The collection should be above R$ 5 billion with this measure.

The value, however, is insufficient to compensate alone for the extent of the payroll tax exemption. Therefore, the government will also maintain higher taxation on banks.

In March, Bolsonaro raised the CSLL (Social Contribution on Net Income) on these institutions from 20% to 25%. At the time, the measure offset the decision to eliminate federal taxes on diesel and cooking gas. The deadline for the measure would also be December 31 of this year.

Now, the rate must be kept at 25%. The collection should be just over R$ 3 billion.

As it is a tax increase, the measure only takes effect 90 days after the publication of the MP (provisional measure). Thus, the rate charged to banks will fall to 20% until the end of March, and then rise again until December 2022.

In the case of the IOF, considered a regulatory tax, it is not necessary to comply with the so-called ninety. Therefore, the surcharge will remain uninterrupted.

To ensure compliance with the LRF, the acts that make the maintenance of the increase in taxes official must be published by Friday (31), together with the sanction of the payroll exemption.

The adoption of compensation measures triggered a reaction among parliamentarians who support the exemption.

“If we have exemptions linked to the increase in the IOF, it is the same thing as giving it with one hand and taking it away with the other,” stated deputy Jerônimo Goergen (PP-RS), who was rapporteur of the proposal in the Chamber of Deputies.

Congressmen tried to support the thesis that sanctioning the exemption in 2021 would only mean the continuation of a policy already in force, dispensing with compensation.

Technicians from the Ministry of Economy, however, warned the president that he could be accused of a crime of responsibility, subject to impeachment, if he sanctioned the extension of the measure without complying with the requirements of the LRF.

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.

The permit was created ten years ago as a way to reduce costs on hiring labor for some sectors. Since then, the policy has gone through a process of expansion and, more recently, a reduction in its scope. Currently, 17 sectors are still benefited.

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.

The IPI bill extends until the end of 2026 the tax exemption on the acquisition of cars by taxi drivers, taxi driver cooperatives and people with disabilities and hearing impaired people.

In the 2022 Budget vote, the proposal’s rapporteur, Deputy Hugo Leal (PSD-RJ), included the forecast of waiver of revenue from the initiatives, in the order of R$ 2.3 billion with the exemption from IPI on personal cars with disabilities and R$676.5 million with the benefit to taxi drivers.