Paulo Guedes wants to slim the “obese state” by charging less tax on home appliances, to “benefit the industrial sector and the mass consumer”. He says the permanent increase in government revenue was over BRL 100 billion in 2021. He wants to give back up to BRL 20 billion to the “abusively exploited population” by the gluttonous government. To this end, a tax on stoves, refrigerators and washing machines would be reduced.
Hmm.
As in the case of diesel and gasoline, if the government charges less tax, it will incur more debt. It will therefore pay more interest, which benefits the rich.
The way Guedes talks, it seems that there is money left over. Not too much, of course. With an increase in revenue, in 2021 the federal government spent R$36 billion more than it raised (it had a primary deficit of R$36 billion). This account does not include debt interest expenses, only expenses such as Social Security, salary, social benefit, machinery, investment, etc.
Speaking of debt, the federal government paid R$407 billion in interest last year. Paid with more debt, “rolled”.
In 2022 and for many years to come, the government will have to borrow money to pay its basic expenses, which has been happening since 2014. The predicted federal deficit is R$79 billion (or R$95 billion, according to the “market” ). If you fail to collect more tax, you will incur even more debt and pay even more interest, apart from other possible rolls. The exaggerated and incompetent increase in debt can cause a roll: higher interest and dollar.
Jair Bolsonaro gave up on lowering the tax on gasoline. As usual, what he said about zeroing tribute was mouth-watering as he didn’t know what he was doing.
But the government still wants Congress to invent a hack that would authorize it to lower PIS/Cofins on diesel without having to make up for lost revenue by raising another tax or cutting spending. By zeroing PIS/Cofins on diesel, it would give up up to R$ 20 billion per year.
In short, Bolsonaro and Guedes want to indebted the government and give more money to the rich in order to carry out electoral demagoguery.
In certain situations, in theory, the government can take on relevant or necessary indebtedness. It can take on more debt to finance so-called “productive” investments, in “works”, in science, in research. You can go into debt in order to prevent many more people from dying of hunger, disease or despair, as in the epidemic in 2020.
It is also necessary to say that part of this indebtedness may even result in some revenue gain (part of the tax reduction money would return due to increased consumption, for example theoretical). This is unlikely to materially occur through tax cuts.
According to some left-wing economists, increasing debt via increased investment may even result in further economic growth. But let’s go. These accounts are complicated and the subject is extensive and controversial, to say the least. In Brazil right now, this extra debt will only amount to more bullshit.
In the most modest aspect, it is even possible that the PIS/Cofins discount on diesel (33 cents per liter) does not even reach the pump, as well as the tax reduction (IPI) on home appliances, an old mania of Guedes, may not reach the store prices.
As usual, it is useless to show some tables or basic problems of argument, social justice and incongruity of means and ends. Congressional chiefs say it’s a “priority” to tinker with fuel. Bolsonaro desperately needs some demagoguery to save a few points in the polls. End.
Source: Folha
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