Panel SA: Industry wanted a 50% cut in IPI, but sees the 25% promised by Guedes as a first step

The 25% cut in the IPI (Tax on Industrialized Products) that Economy Minister Paulo Guedes said is being prepared by the government is far below the level that the industry has been asking for, of reducing the tax by 50% or even zero.

Despite not meeting expectations, the minister’s speech this Tuesday (22) was well received by business representatives from various sectors.

Fernando Pimentel, president of Abit (association of the textile and clothing industry), says that the direction is correct and, if it happens, will have the support of the sector.

“It will be the best indication that any government could give, because, until now, governments have only increased the load. It would be the first time that we would not only have a non-increase, but a reduction. the tax on industrialized products, because it only exists against the industry, but it is a first step. If it comes to 50%, better. If it comes to 25%, it will be below what we would like, but it will be a relevant step, which has not been taken in recent years , except temporarily and for some sectors in a time of crisis. The cut will be very welcome, mainly for the indicator and, of course, for the reduction of costs and cheaper products for the final consumer”, says Pimentel.

The former finance minister of the PT, Guido Mantega, also cut the IPI from sectors such as automotive and white goods. The IPI can have its rates changed by presidential decree, without congressional approval.

For José Ricardo Roriz, president of Abiplast (plastics industry), it will start with 25%, but, depending on the collection, could reach 100%. “Ideally, the increase in collection is not used to increase costs and wages, but to reduce taxes. Only the industry has taxes along the lines of the IPI, no other sector has”, says Roriz.

Synesio Batista, president of Abrinq, a toy industry association, says there is still hope for expansion in the cut. He says the government can now offer the 25% regardless of the direction Congress takes in discussions to try to reduce fuel prices, a priority for Bolsonaro and the allied base in an election year. But the 50% could come if the so-called Kamikaze PEC is not approved, which would have an impact of over R$100 billion, according to Guedes’ team’s calculations.

“Furthermore, we want to extend the period for collecting federal taxes, something that can be done with a pen”, says the president of Abrinq.

Marco Polo de Mello Lopes, president of Instituto Aço Brasil and spokesperson for the so-called Coalizão Indústria, which brings together representatives from more than ten sectors, also says that he expected a greater reduction at this first moment, but he received Guedes’ statement as a first step.

“Our expectation was that the cut could have been greater, but we understand what are the limitations that the government faces and we understand that it is the beginning of the process that aims to extinguish the IPI”, says Lopes.

According to him, the topic will remain on the agenda of the Coalition’s periodic meetings with Guedes.

João Carlos Basilio, president of Abihpec (an association for the personal care and cosmetics industry), hopes that Guedes will publish the change as soon as possible.

“IPI should not even exist. Eliminating 25% is not what we need, but it is a process. If this process shows a certain stability in the economy and perhaps even a possibility of growth, it is very positive”, he says.

Joana Cunha with Andressa Motter and Ana Paula Branco